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GROWTH
WITH INTELLIGENCE AND INNOVATION
ANNUAL REPORT 2014
Aloft Guadalajara
CONTENT
2014 ANNUAL REPORT
3 Strategy
About Fibra inn
Mission
Vision
Business Model
Structure
Our Leadership
Fibra Inn’s Specialization in the Hotel Business
Value Creation for our Investors in 2014
Dividends
13Highlights
18Message to our Investors
20Portfolio
34Corporate Governance
48Management Discussion and Analysis
57Audited Financial Statements
Investor Information
1
ANNUAL REPORT 2014
Casa Grande Delicias
STRATEGY
ABOUT FIBRA INN
Fibra Inn is a Mexican real estate trust, mainly created to acquire, develop and lease
a group of hotel properties in Mexico. Headquartered in Monterrey, Fibra Inn owns a
portfolio of high-quality properties that are designed to serve business travelers, and are
geographically diversified.
2
3
ANNUAL REPORT 2014
ANNUAL REPORT 2014
The properties operate under renowned international brands that have important loyalty
programs in the hospitality industry, and offer options that appeal to business travelers.
Fibra Inn CBFIs (Real Estate Trust Certificates) are listed on the Mexican Stock Exchange
(BMV) under ticker symbol “FINN13”.
STRUCTURE
Control Trust
Adhering Guests
<49%
MISSION
To fully satisfy the needs of our
guests, thereby generating value
for Fibra Inn's investors.
Public
Investors
Control
Trust
83.3%
16.7%
Founders
>51%
The Advisor
The Hotel Operator
VISION
To be the leading hotel proprietor providing
accommodation services to business travelers,
throughout Mexico, offering memorable
experiences for guests, a healthy and adequate
work environment for employees as well as exceed
investor expectation.
100%
Management
Subsidiary
Operadora México Servicios y
Restaurantes, SAPI de CV
(Non-lodging facilities)
Servicios Integrales Fibra Inn
(Payroll)
Impulsora Fibra Inn
(Payroll outsourcing)
VALUES
• Service Attitude
• Reliability
• Integrity
• Respect
• Teamwork
BUSINESS MODEL
• Specialization in Business Hotels
•  Operates with leading Global Brands
5
•  Preference for Acquisitions over Developments
ANNUAL REPORT 2014
ANNUAL REPORT 2014
4
•  Intelligent Portfolio Growth
Hampton Inn by Hilton Monterrey Galerias Obispado
Wyndham Garden León Centro Max
OUR LEADERSHIP
“We are hotel people
In the hotel business”
• We Seek to Deliver Outstanding Performance:
• Creating a memorable experience for our guests.
• With motivated employees throughout our organization.
• Which will be reflected in higher investor returns.
• We have a highly specialized Management Team, with vast hotel
industry experience.
• We utilize a Technology Platform provided by the international
hotel chains in order to maximize revenue generation.
• We have a Flexible Operations Model to efficiently replicate procedures
in the new hotels.
• We institute the best hotel practices and apply them throughout
the organization.
• We seek to establish Internal communications and delegation of
decision-making among employees to improve the performance of the
organization.
FIBRA INN SPECIALIZATION IN THE
HOTEL BUSINESS
• Our hotels are in the best locations.
• Our properties have the proper hotel infrastructure.
• We operate with the top hotel brand names.
• We optimize the use of technological tools.
• We strive to offer memorable experiences for our guests.
• We have well-trained and motivated personnel, who are specialized in the industry.
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ANNUAL REPORT 2014
ANNUAL REPORT 2014
• Our management team has vast experience in the hotel industry.
Casa Grande Chihuahua
VALUE CREATION FOR
INVESTORS IN 2014
DISTRIBUTION
SUSTAINED GROWTH
13
Acquisitions and Developments (2)
Dividend yield
4.9%
(1)
The highest in the publicly
held hotel industry
• The acquisition of 13 hotels, representing
1,733 rooms.
hotels
acquired
• The expansion of 4 hotels, representing 304
additional rooms.
• The development of 3 properties, representing 645
rooms under construction.
Distribution
Ps.
237
million
29.8% vs. 2013
• Acquisition cap rates between 10% and 11.2%.
• Developement cap rates between 11.3%
and 12.3%.
7.5%
Average Daily Rate
Organic Growth
4.6%
• Increase of Room Revenue, 6.4%.
• Increase of Average Daily Rate, 7.5%.
RevPAR
• Increase of RevPAR, 4.6%.
OPERATIVE INDICATORS IN COMPARABLE PROPERTIES (22 HOTELS)
Room Revenue Occupancy
Average Daily Rate RevPar 2014
2013
$ 800.5
59.6%
$ 1,016.5
$ 605.9
$ 752.1
61.3%
$ 945.6
$ 579.4
VARIATION
6.4%
-1.7 pp
7.5%
4.6%
9
(1) Considers the payment of annualized dividends considering the price of the CBFI at Ps. 16.40 at December 31, 2014.
(2) On March 26, 2015, Fibra Inn announced the temporary suspension in the construction of the Fairfield Inn & Suites by Marriott in Ciudad del Carmen due
to market changes. Therefore, on the date of presentation of this Annual Report, Fibra Inn has 31 hotels and two in development, representing 5,538 rooms
and 465 rooms under construction.
ANNUAL REPORT 2014
ANNUAL REPORT 2014
8
Holiday Inn Express Guadalajara Autónoma
EFFICIENT HOTEL OPERATION
• 4 Synergies in 8 hotels.
36.4%
• Change of operator in 3 hotels.
• Rebranding in 3 hotels.
NOI margin
• Addition of 304 rooms.
• Operation with 12 international brands and two of national prestige.
• Diversified portfolio in 14 states of the nation.
• The results reflect the expertise of the Fibra Inn as Hotel Operator:
• NOI margin, 36.4%, the most attractive of the public hotel industry.
• Adjusted EBITDA margin, 30.4%.
30.4%
Adjusted EBITDA margin
• Growth of EBITDA, 37.0% and Adjusted EBITDA, 80.1%.
• EBITDA per room, Ps.74,191(1).
TAX ADVANTAGES
• FIBRAS excluded from the 10% income tax on capital gains.
• FIBRAS are not affected by the additional taxes on paid dividends.
• FIBRAS do not pay income tax; the taxpayer is the holder (if it is not exempt).
DIVIDENDS
2014
Dividend per CBFI Dividend Yield
Total Distribution
0.7996
4.9%
237.1
2013
0.7067
4.1%
182.6
13.1%
29.8%
11
(1) Calculated based on the number of rooms in operation and considering the Adjusted EBITDA
ANNUAL REPORT 2014
ANNUAL REPORT 2014
10
VARIATION
Holiday Inn Express & Suites Toluca Aeropuerto
HIGHLIGHTS
Same Store Operational Performance (1)
Room Revenue 800.5 Occupancy
59.6%
Average Daily Rate
1,016.5 Revenue per Available Room 605.9 Sales mix
Room Revenue 94.1%
Rental Revenue
5.9%
Other Revenue
Financial Indicators (2)
NOI
321.6 NOI margin 36.4%
Adjusted EBITDA
268.9 Adjusted EBITDA margin
30.4%
EBITDA per room
75,320
FFO
257.5 FFO per CBFI
0.5892
Outstanding CBFIs
437.0
Number of Hotels and Rooms (3)
Number of properties 31
Developments
3
Weighted number of days per acquisition
73%
Number of states
14
Number of rooms in operation
4,887 Number of rooms under construction
645 Number of rooms in agreement 186 Total number of rooms
5,718 ANNUAL REPORT 2014
12
2013
VARIATION
752.1 61.3%
945.6 579.4 6.4%
-1.7 p.p.
7.5%
4.6%
4.3%
82.3%
13.4%
175.4 86.4%
149.3 73.6%
65,868 207.4 0.8187
258.3
18
0
74%
11
3,036 304 – 3,340 83.4%
80.1%
14.3%
24.1%
13
3
–
3
1,851
341
186
2,378
(1) ) Indicators in 22 comparable properties.
(2) Figures expressed in millions of pesos, except EBITDA per room and FFO per CBFI, which are expressed in pesos.
(3) O
n March 26 of 2015, Fibra Inn announced the temporary suspension in the construction of the Fairfield Inn & Suites by Marriott in Ciudad del Carmen due to market changes. Therefore, on the date of presentation
of this Annual Report, Fibra Inn has 31 hotels and two in development, representing 5,538 rooms and 465 rooms under construction
13
ANNUAL REPORT 2014
2014
Holiday Inn México Coyoacán
REVENUE PER SEGMENT
TOTAL REVENUE
884.3
(Ps. millions)
10.4%
36.8%
2013
2014
202.9
224.4
203.6
199.6
256.7
CONTRACTING DEBT
82.9
65.2
7.5
47.3
52.8%
Full Service
Select Service
Limited Service
1 QTR
2 QTR
3 QTR
4 QTR
ANNUAL
Cash
Total Assets
Bank Obligations Total Liabilities Total Equity ADJUSTED EBITDA AND NOI
57.0
59.3
36.4%
37.0%
53.7
1.3%
OBJECTIVE OF THE LINE OF CREDIT:
FINANCING OUR EXPANSION PLAN
• Contract signed on September 8, 2014.
1 QTR 2 QTR 3 QTR 4 QTR 1 QTR 2 QTR 3 QTR 4 QTR
Adjusted EBITDA
Figures in million pesos.
Loan to Value
5.6
2013
721.1
2,678.5
66.0
67.6
2,610.9
81.1
36.0
6.2
385.6
4,882.0
–
304.2
4,577.8
1 QTR
2014
2014
NOI
2 QTR
NOI margin
3 QTR
4 QTR
ANNUAL
Adjusted EBITDA margin
• Financial Institutions: Banorte, Actinver, Banamex,
BanRegio and Scotiabank.
• Amount: Ps. 2,3 billion.
• Guarantees: trust and security agreements on 16 hotels.
0.7996
DISTRIBUTION AND DIVIDEND YIELD
5.3%
4.2%
1 QTR
2 QTR
Distribution per CBFI
0.2323
0.1683
ANNUAL REPORT 2014
0.2283
3.7%
14
4.9%
3 QTR
• Initial disposition: Ps.100 million (to comply with
the terms established in the Credit Contract).
• Convenants compliance.
0.1707
5.2%
• Amortization: upon expiration of the contract on
March 8, 2019.
4 QTR
8%
Coverage ratio for
Servicing the Debt
2,3
Ps. billion
Amount of the line
of credit
TIIE + 2.5%
Interest rate
100%
Coverage with
rates swap
ANNUAL
Dividend Yield
15
ANNUAL REPORT 2014
74.8
50.1
1,106.7
7,560.5
66.0
371.7
7,188.8
30.4%
26.3%
42.7
30.3%
38.7%
33.3%
32.9%
36.6%
67.0
31.3%
58.6
Ps. VAR
95.0
86.7
72.9
2013
NOI AND ADJUSTED EBITDA MARGINS
(Ps. millions)
68.5
2014
Casa Grande Delicias
2,832
Ps. million
Proceeds obtained from the
subscription of CBFIs
CAPITAL INCREASE
CBFI ISSUANCE EXCLUSIVELY
FOR HOLDERS
• The objective of the subscription was to increase equity
in order to finance the expansion plan of 15 hotels per
year in 2015 and 2016.
• The capital increase was carried out by means of a
subscription of CBFIs exclusively for holders, with an
ex-rights date of November 4, 2014.
• Amount of CBFIs offered in two rounds, for subscription:
Up to 100% of the CBFIs outstanding.
• The unsubscribed CBFIs were canceled.
• The number of outstanding CBFIs is currently at
437,019,542.
15.85
Ps. Price per CBFI
9.38%
Discount Rate
69.2%
Total subscribed
16.7%
Current share held by
the Controlling Trust
83.3%
Float
STRUCTURE OF FIBRA INN FEES
MODIFICATION OF THE FEES PAID BY FIBRA INN:
• Elimination of the 3.0% fee for the acquisition of properties.
• Modification of the Advisory Fee of 0.5% to 0.75% of the gross real estate
asset value, adjusted to inflation.
This resolution was approved at the General Ordinary Holders’ Meeting held
on October 17, 2014.
17
ANNUAL REPORT 2014
ANNUAL REPORT 2014
16
MESSAGE TO
THE INVESTORS
Fibra Inn committed to the financial markets in order to reach
objectives in the face of a challenging scenario. Today we
can assure our holders that we have accomplished each of
those objectives.
The most important accomplishments were:
1.Growth of the portfolio to 30 hotels at the end of 2014.
Today we have 34 properties: 31 hotels in operation, 2 in
development and one lot.
2.Payment of attractive dividends to our investors. Out of
the public hotel companies, Fibra Inn has paid the highest
interest rate in distributed dividends in the market.
3.Change in fee structure. The market spoke and we
listened, eliminating the 3% acquisition fee and making
the required adjustments.
4.The operation of hotels with a greater number of global
brand names. We went from two to 12 internationally
recognized brand names.
5.Geographic Diversification. We went from operating
hotels in 6 states, mainly in the northern region of
Mexico, to a total of 14 states. Today, we are present
mostly in the central part of Mexico, where the greatest
economic activity is located.
ANNUAL REPORT 2014
18
6.Continuous improvement in operational efficiency. Today,
Fibra Inn is the publicly-held hotel FIBRA with the best
efficiency and profitability indicators.
But this is all history now...
Looking towards the 2015-2016 period, the challenges are
not fewer. Therefore, in order to double the portfolio, we
have defined a strategy that will place us on the correct
path to achieving our objectives.
For this, we are making decisions at the top level, that
we are confident will help us reach our proposed goals.
Fibra Inn's Technical Committee Chairman shall adopt the
following measures in order to ensure that we reach our
long-term goals in the most efficient manner.
1.Ensure that our Portfolio Expansion is carried out in
accordance with the quality and profitability criteria we
have followed up to now. That is, we will ensure that these
investments adhere to prudent hotel business criteria and
are consistent with Fibra Inn's strategy of serving the
business traveler in the regions we have defined as strategic throughout Mexico.
2.Improve Fibra Inn's Corporate Governance standards
by carrying out changes in our organization, which will
ensure the implementation of the best industry practices. As an example, we recently made the decision to
separate the duties of the Chairman of the Technical
Committee and those of the Chief Executive Officer. We
have also strengthened our organizational structure with
an experienced and seasoned team of executives.
3.Finally, we will work towards fortifying Fibra Inn's Strategic Control Group, in order to obtain strategic alliances that will continue to drive growth and generate
investor value.
I wish to thank our investors for the confidence they have
placed in Fibra Inn by participating in the subscription of
capital last November. As a result of this transaction, today
Fibra Inn is in a position to meet its growth objectives by
reaching 60 hotels by the end of 2016, thereby substantially increasing Fibra Inn's size. As of this date, our market
capitalization amount has reached nearly US$486 million,
compared with nearly US$385 million on the date of our
Initial Public Offering.
Fibra Inn's liquidity is extremely important to the capital
markets, thus we are focused on and doing everything
possible to increase the liquidity of the CBFIs. For this
reason, we will continue to promote a virtuous circle that
will generate liquidity with a greater and diversified investor
base. Our ultimate objective continues to be to maximize
visibility, interest in and, as a result, the long-term liquidity
of the Company.
Finally, I wish to express my appreciation to all of you –our
partners, colleagues, investors and employees who form a
part of the Fibra Inn group– for your interest in our company.
Sincerely,
Victor Zorrilla Vargas
Chairman of the Technical Committee
19
ANNUAL REPORT 2014
Two years have passed since the creation of Fibra Inn took
place. We sought to become a publicly-held company, and we
felt that in order to reach the growth we anticipated in the
hotel sector we had to resort to the most efficient financing
source: the capital markets. Today, we can be certain that we
were not wrong and that we chose the correct path.
PORTFOLIO
BRANDS
KEY
INDICATORS
34
Properties
5,718
Rooms
Holiday Inn Puebla La Noria
FOOTPRINT
3
Segments
PROPERTIES
2013
ROOMS
PROPERTIES
ROOMS
14
Hotels31
5,07318 3,036
(1)
645– 304
Developments 3
Total
34 5,71818 3,340
PROPERTIES
Limited Service (2)11
Select Service
13
Full Service
10
Total
34
14
ROOMS
1,53027%
2,45743%
1,731
30%
5,718100%
20
ANNUAL REPORT 2014
States
Brands
Intercontinental Hotels Group (IHG)
Wyndham Hotel Group International
Hilton Worldwide
Marriott International
W International, Inc. (Starwood )
Camino Real
(1) On March 26, 2015, the temporary suspension in the construction of the Fairfield Inn & Suites by Marriott in Ciudad del Carmen was announced, due to market changes. Therefore, on the date of presentation of this
Annual Report, Fibra Inn has 31 hotels and two in development, representing 5,538 rooms and 465 rooms under construction.
(2) For the reason previously mentioned, Fibra Inn has 10 hotels with limited service, representing 1,350 rooms.
Casa Grande
1,807
Ps. million invested in
hotels in 2014
21
ANNUAL REPORT 2014
2014
INTERCONTINENTAL HOTELS GROUP (IHG)
Crowne Plaza Monterrey Aeropuerto
13
Hotels
58.5%
Occupancy
Ps. 1,014.2
ADR
593.7
RevPAR
ANNUAL REPORT 2014
22
Mar·13
Mar·13
Mar·13
Mar·13
May·13
May·13
May·13
HOTEL
Holiday Inn Express
Holiday Inn Express & Suites
Holiday Inn Express
Holiday Inn Express
Holiday Inn Express
*Figures expressed in millions of pesos; and excludes acquisition expenses.
SEGMENT
Saltillo Aeropuerto
Ciudad Juárez
Toluca Aeropuerto
Monterrey Aeropuerto
Guadalajara Autónoma
Playa del Carmen
Toluca
Select Service
Select Service
Select Service
Select Service
Select Service
Select Service
Select Service
INVESTMENT
(millions of pesos)
260
182
336
228
267 175 76 ROOMS
180
182
280
198
199
196
127
ACQUISITION
May·13
May·13
Oct·13
Dec·13
May·14
Dec·14
HOTEL
Holiday Inn Hotel & Suites
Holiday Inn
Holiday Inn
Holiday Inn
Holiday Inn
Crowne Plaza
SEGMENT
Guadalajara Centro Histórico
Monterrey Valle
Puebla La Noria
México Coyoacán
Tampico Altamira
Monterrey Aeropuerto
Full Service
Full Service
Full Service
Full Service
Full Service
Full Service
INVESTMENT
(millions of pesos)
140
204 194 381
207
351
ROOMS
90
198
150
214
205
219
23
ANNUAL REPORT 2014
ACQUISITION
WYNDHAM HOTEL GROUP INTERNATIONAL
Microtel Inn & Suites by Windham Ciudad Juárez
9
Hotels
56.4%
Occupancy
Ps. 811.3
ADR
457.9
RevPAR
ANNUAL REPORT 2014
24
Jul·13
Jan·14
Apr·14
Apr·14
Dec·14
HOTEL
Wyndham Garden
Wyndham Garden
Wyndham Garden
Wyndham Garden
México Plaza(1)
(1) To be converted to Wyndham Garden.
SEGMENT
Irapuato
León Centro Max
Celaya
Silao Bajío Aeropuerto
Guadalajara Andares
Limited Service
Limited Service
Limited Service
Limited Service
Limited Service
INVESTMENT
(millions of pesos)
93
150
139
82
183
ROOMS
102
126
150
143
186
ACQUISITION
Nov·14
Nov·14
Dec·14
Dec·14
HOTEL
Microtel Inn & Suites by Windham
SEGMENT
Culiacán
Ciudad Juaréz
Chihuahua
Toluca
Limited Service
Limited Service
Limited Service
Limited Service
INVESTMENT
(millions of pesos)
61
61
73
66
ROOMS
113
113
108
129
25
ANNUAL REPORT 2014
ACQUISITION
HILTON WORLDWIDE
MARRIOTT INTERNATIONAL
Hampton Inn by Hilton Saltillo Aeropuerto
Marriott Puebla
1
Hotel
66.4%
Occupancy
1,267.2
Ps.
ADR
841.8
RevPAR
4
Hotels
62.3%
Occupancy
Ps. 1,016.3
ADR
633.6
RevPAR
ANNUAL REPORT 2014
Mar·13
Mar·13
Mar·13
Mar·13
HOTEL
Hampton Inn by Hilton
SEGMENT
Monterrey
Saltillo Aeropuerto
Reynosa Zona Industrial
Querétaro Tecnológico
Select Service
Select Service
Select Service
Select Service
INVESTMENT
(millions of pesos)
222
289
42
215
ROOMS
223
227
145
178
DATE
Oct·13
HOTEL
Marriott
SEGMENT
Puebla
Full Service
INVESTMENT
(millions of pesos)
465
ROOMS
296
27
ANNUAL REPORT 2014
DATE
26
W INTERNATIONAL, INC. (STARWOOD)
CAMINO REAL
Aloft Guadalajara
Camino Real Guanajuato
1
Hotel
56.2%
Occupancy
1,352.1
Ps.
ADR
760.0
RevPAR
1
Hotel
42.6%
Occupancy
1,133.8
Ps.
ADR
483.2
RevPAR
29
DATE
Apr·14
HOTEL
Aloft
SEGMENT
Guadalajara
Select Service
INVESTMENT
ROOMS
257
142
(millions of pesos)
DATE
HOTEL
Aug·13
Camino Real
SEGMENT
Guanajuato
Full Service
INVESTMENT
(millions of pesos)
279
ROOMS
155
ANNUAL REPORT 2014
ANNUAL REPORT 2014
28
CASA GRANDE
Crowne Plaza Monterrey Aeropuerto
Casa Grande Chihuahua
2
Hotels
40.7%
Occupancy
Ps. 874.9
ADR
356.3
RevPAR
ANNUAL REPORT 2014
Dec·14
Dec·14
HOTEL
Casa Grande (1)
Casa Grande
(1) This property will be rebranded to Wyndham Garden in 2015.
SEGMENT
Chihuahua
Delicias
Full Service
Full Service
INVESTMENT
ROOMS
106
71
115
89
(millions of pesos)
31
ANNUAL REPORT 2014
DATE
30
DEVELOPMENTS
SALTILLO
COATZACOALCOS
CD. DEL CARMEN
SEGMENT
SEGMENT
SEGMENT
SELECT
LIMITED
LIMITED
179.20
INVESTMENT
(Ps. MILLION)
180
ROOMS
163
INVESTMENT
(Ps. MILLION)
21
INVESTMENT
(Ps. MILLION)
180
ROOMS
32
33
ANNUAL REPORT 2014
ANNUAL REPORT 2014
On March 26, 2015, the temporary suspension in the construction of the Fairfield Inn & Suites by Marriott in Ciudad del
Carmen was announced, due to market changes. Therefore,
as of the date of presentation of this Annual Report, Fibra
Inn has 31 hotels and two more under development; out of a
total of 5,538 rooms, 465 are under construction.
CORPORATE
GOVERNANCE
TECHNICAL COMMITTEE
Victor Zorrilla Vargas
President
DIRECTORS
Oscar Eduardo
Calvillo Amaya
Chief Executive Officer
Joel Zorrilla Vargas
Oscar Eduardo
Calvillo Amaya
Juan Carlos Hernaiz Vigil
José Gerardo
Clariond Reyes-Retana
Adrián Jasso
Robert Jaime
Dotson Castrejón
Joel Zorrilla Vargas
Vice-president
of Corporate Strategy
Rafael de la Mora Ceja
Chief of
Hotel Operations Officer
Fernando Rocha Huerta
Chief of Acquisitions
and Development Officer
José Antonio Gómez
Aguado de Alba
Miguel Aliaga Gargollo
Chief Financial Officer
Lizette Chang y García
Investor Relations Officer
Everardo Elizondo
Almaguer*
Adrián Garza de la Garza*
Laura Nelly
Lozano Romero
Legal Director
Alberto Rafael Gómez Eng*
35
Héctor Medina Aguiar*
Marcelo Zambrano Lozano*
*Independent members.
ANNUAL REPORT 2014
ANNUAL REPORT 2014
34
Holiday Inn México Coyoacán
ANNUAL REPORT ON ACTIVITIES
TRUST F/1616 TECHNICAL COMMITTEE
The undersigned, Mr. Victor Zorrilla Vargas, Chairman of
the Technical Committee of the Irrevocable Trust identified
under the number F/1616 (the “Trust”), hereby reports to
the Shareholders’ Meeting on the completion of the following
activities during the fiscal year 2014:
• Six meetings were held, during the months of April,
July, August, October and November 2014 as well as in
February 2015.
• The Consolidated Financial Statements were approved
for March, June, September and December 2014, upon
recommendation from the Audit Committee.
• The March, June, September and December 2014 Holder
distributions were approved for a total of Ps. 237.1 million
upon recommendation from the Audit Committee.
• The 2014 budget for the Trust and its Subsidiary was
approved.
• The contract terms of KPMG as the External Auditor of
the Trust for the year 2014 were approved, upon the
recommendations by the Audit Committee.
• The Audited Financial Statements for the year 2013 with
the corresponding Opinion Report whithout exception
by the External Auditor were approved, after hearing the
opinion of the Auditing Committee.
Wyndham Toluca, and Crowne Plaza Monterrey Airport.
• Approval was given, following the opinion of the Practices and Investments Committee, for the annual and
semi-annual review of the rental for the spaces utilized
by Operadora Mexico –a Related Party– in the hotels
where it was determined that an updating was required.
• Approval was given for the substitution of Starwood by
Gestor de Activos Prisma –a Related Party– in the operation of the Hotel Aloft Guadalajara.
• A proposal to the holders relative to the modification
of the Structure of the Trust’s fees was authorized, after
hearing the opinion of the Practices and Investments
Committee.
• The designation of an Evaluation Committee was approved,
which analyzed and authorized the contracting of Santander
as a market maker.
• The integration of the Credit Oversight Committee was
approved, in compliance with the regulation established by
the CNBV in the “Circular Única de Emisoras” of June 2014.
San Pedro Garza García, April 24, 2015
• The acquisition of the Crowne Plaza Hotel Monterrey
Airport was approved, with a total investment value of
Ps.384.8 million, after hearing the opinion of the Practices and Investments Committee.
Mr. Victor Zorrilla Vargas
Chairman of the Technical Committee
Trust F/1616
37
ANNUAL REPORT 2014
ANNUAL REPORT 2014
36
• Approval was given –after hearing the opinion of the
Practices and Investments Committee– to the contracting
terms with Operadora México –a Related Party– of the
hotels México Plaza Silao, México Plaza Guadalajara
Andares, Casa Grande Chihuahua, Casa Grande Delicias,
Microtel Inn & Suites by Wyndham Chihuahua, Microtel
Inn & Suites by Wyndham Culiacán, Microtel Inn & Suites
by Wyndham Ciudad Juárez, Microtel Inn & Suites by
Holiday Inn Express Guadalajara Autónoma
ANNUAL REPORT ON THE ACTIVITIES
TRUST F/1616 AUDIT COMMITTEE
The undersigned, Mr. Rafael Gomez Eng, Chairman of the Audit Committee of the Irrevocable
Trust identified under the number F/1616 (the “Trust”), hereby reports to the Shareholders’
Meeting that buring fiscal year 2014 the following activities were completed carried.
• Four meetings were held, taking place in the months of April, July, and October, as well
as in February of 2015.
• The Consolidated Financial Statements corresponding to March, June, September and
December of 2014 were analyzed and recommended to the Technical Committee.
• The March, June, September and December, 2014 Holder Distribution were evaluated
and recommended to the Technical Committee for a total of Ps. 237.1 million.
• Various Accounting Policies were established, relative to the booking of the expenses
related to the acquisition of hotels, the expenses involved in the issuing of debt and the
booking of derivative instruments.
• The work carried out by the Auditing firm was duly supervised. The contract terms of
KPMG as the External Auditor of the Trust for the year 2014 were defined and were
recommended to the Technical Commitee.
• The Certified Financial Statements for the year 2013, with the corresponding Opinion
Report were analyzed and recommended to the Technical Committee, with no exception
from the External Auditor.
38
39
ANNUAL REPORT 2014
ANNUAL REPORT 2014
Mr. Rafael Gómez Eng
Chairman of the Audit Committee
Trust F/1616
TRUST F/1616 PRACTICE AND
INVESTMENT COMMITTEE
The undersigned, Mr. Adrián Garza de la Garza, Chairman of the Practices and Investments
Committee of the Irrevocable Trust identified under the number F/1616 (the “Trust”),
hereby reports to the Shareholders’ Meeting at the completion of the fiscal year 2014:
• Three meetings were held during the months of April, July and August of 2014.
• The acquisition of the Hotel Crowne Plaza Monterrey Airport, with a total investment of
Ps. 384.8 million was evaluated and recommended to the Technical Committee.
• The contracting terms with Operadora México –a Related Party– were recommended
to the Technical Committee in regard to the hotels México Plaza Silao, México Plaza
Guadalajara Andares, Casa Grande Chihuahua, Casa Grande Delicias, Microtel Inn &
Suites by Wyndham Chihuahua, Microtel Inn & Suites by Wyndham Culiacán, Microtel
Inn & Suites by Wyndham Ciudad Juárez, Microtel Inn & Suites by Wyndham Toluca, and
Crowne Plaza Monterrey.
• It was confirmed that the Eligibility Criteria were met to invest in the following hotels:
México Plaza Guadalajara Andares, Casa Grande Chihuahua, Casa Grande Delicias,
Microtel Inn & Suites by Wyndham Chihuahua, Microtel Inn & Suites by Wyndham
Toluca, Microtel Inn & Suites by Wyndham Ciudad Juárez, with a total investment of
Ps.701.6 million.
• The annual and semi-annual review of the rental for the spaces utilized by Operadora
Mexico –a Related Party– in the hotels where it was determined that an updating was
required, was analyzed and recommended to the Technical Committee.
• The substitution of Starwood by Gestor de Activos Prisma –a Related Party– in the
operation of the Hotel Aloft Guadalajara, was evaluated and recommended to the
Technical Committee.
• A proposal to the Shareholders’ meeting relative to the modification of the fee structure of
the Trust’s commissions was studied and recommended to the Technical Committee.
41
Mr. Adrián Garza de la Garza
Chairman of the Practices and Investments Committee
Trust F/1616
ANNUAL REPORT 2014
ANNUAL REPORT 2014
40
Wyndham Garden Irapuato
TRUST F/1616 NOMINATIONS COMMITTEE
The undersigned, Mr. Marcelo Zambrano Lozano, Chairman of the Nominations Committee
of the Irrevocable Trust identified under the number F/1616 (the “Trust”), reports to the
Shareholders’ Meeting that during the fiscal year 2014 no meetings were held, since there
were no changes in the independent members of the Technical Committee after the Holders
Meeting that was held in April, 2014.
42
43
ANNUAL REPORT 2014
ANNUAL REPORT 2014
Mr. Marcelo Zambano Lozano
Chairman of the Nominations Committee
Trust F/1616
Wyndham Garden Silao Bajío Aeropuerto
TRUST F/1616 CREDIT SURVEILLANCE
COMMITTEE
The undersigned, Mr. Rafael Gomez Eng, Chairman of the Credit Surveillance Committee
of the Irrevocable Trust identified under the number F/1616 (the “Trust”), reports to the
Shareholders’ Meeting that the following activities were carried out during the fiscal year 2014:
• Two Meetings were held in the month of October, 2014 as well as in February, 2015.
• The compliance with the terms approved by the Shareholders’ Meeting provided in the Bank
Loans contracted in September, 2014 was supervised.
• In the second, third and fourth Quarters of 2014, the compliance with the Financial
Indicators established by the CNBV in the “Circular Única de Emisoras” in June, 2014
was reviewed.
• In the fourth quarter of 2014, the compliance with the Financial Covenants required in the
Credit. Contract subscribed with the Banks in September of that same year was verified.
44
45
ANNUAL REPORT 2014
ANNUAL REPORT 2014
Mr. Rafael Gómez Eng
Chairman of the Credit Surveillance Committee
Trust F/1616
Holiday Inn Express & Suites Ciudad Juárez
ANNUAL REPORT FROM THE ADMINISTRATOR OF THE IRREVOCABLE TRUST IDENTIFIED UNDER THE NUMBER F/1616 (THE “TRUST”),
SUBSCRIBED BY ASESOR DE ACTIVOS PRISMA, S.A.P.I. DE C.V., AS THE TRUSTOR; AND DEUTSCHE BANK MÉXICO, S.A., INSTITUCIÓN
DE BANCA MÚLTIPLE, FIDUCIARY DIVISION AS THE FIDUCIARY, AND CI BANCO, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, AS THE
AGENT ON THE COMPLIANCE WITH FISCAL OBLIGATIONS, IN TERMS OF ARTICLE 76 FRACTION XIX, OF THE INCOME.
San Pedro Garza García, Nuevo León, April 10, 2015.
Pursuant to the provisions established in Article 76, Fraction XIX, of the Income Tax Law, Administradora de Activos Fibra
Inn, S.C., in its capacity as Administrator of the Trust, hereby presents the report that reflects the compliance with the fiscal
obligations of the Trust for the period encompassed between January 1 and December 31, 2014 (the “Period of Review”),
so that in due course the said report can be submitted to the consideration of the Annual General Shareholders’ Meeting
of the of Real Estate Trust Certificates with the ticker symbol “FINN13” (“CBFIs”), which will be held on April 24 of 2015.
It is hereby represented that the fiscal status of the Fiduciary of the Trust was examined for the Period Review that covers
the certified financial statements, and, regarding meeting its fiscal obligations as a direct tax payer, withholder and/or
collector, whereby it is represented that none of the fiscal obligations of the Trust is outstanding or in default.
It is hereby reported that the calculations were verified and found that the federal taxes accrued during the Period
Reviewed as reported show that there are no rulings on outstanding balances or any payment that has been omitted.
Regarding the amount and payment of the Workers Profit Share, it is hereby reported that the Trust has no employees, and
therefore, it was not subject to any labor related obligations during the Period Reviewed.
This report is issued solely and exclusively for the information for the CBFI Holders of the trust, and to be subjected for
approval before the Anual General Shareholders’ meeting of the Trust, pursuant to the provisions established by the applicable laws, and shall not be used for any other purpose.
Sincerely,
46
47
ANNUAL REPORT 2014
ANNUAL REPORT 2014
Administradora de Activos Fibra Inn, S.C.,
in its capacity as Administrator of the Trust
through its legal representative
Mr. Óscar Eduardo Calvillo Amaya
2014 MANAGEMENT
DISCUSSION AND ANALYSIS
Following, we present the Management Discussion and Analysis of the results of the operation. For the analysis of these
financial statements it should be taken into account that, due to the change in the revenue structure that was carried out in
December 2013, 2014 results are not comparable compared to the results reported for 2013.
REVENUE
The sales mix at the end of 2014 is comprised of 31 hotels under operation: 9 Limited Service hotels, 12 Select Service hotels
and 10 Full Service hotels.
On December 31, 2014, Fibra Inn’s revenue reached Ps. 884.3 million, which represented an increase of 335.8% compared
with the figure reported in the previous year. Fibra Inn’s revenue per hotel segment is as follows: Ps. 325.2 million, or 36.8%,
corresponds to Full Service hotels; Ps. 467.1 million, or 52.8%, corresponds to Select Service hotels and Ps.92.0 million, or
10.4%, corresponds to Limited Service hotels.
2014
2013
Ps. (millions)
%
92.0 10.4%
467.1 52.8%
325.2 36.8%
884.3
100.0%
Ps. (millions)
%
7.9 3.9%
144.4 71.1%
50.725.0%
202.9
100.0%
REVENUES PER SERVICE SEGMENT
Limited Service
Select Service
Full Service
Total Revenues
Total 2014 Fibra revenue was Ps.884.3 million, of which:
• Ps. 832.2 million, or 94.1%, was room revenue, which is derived from the 31 properties in the portfolio at the end of
2014, and which reflected the change in the revenue structure.
ANNUAL REPORT 2014
48
• Ps. 52.1 million, or 5.9% was the lease of services other than lodging, such as the rent of meeting rooms, coffee breaks,
conference rooms and restaurants, as well as the rental of some commercial retail spaces.
The revenue variations from room revenue and revenue from the lease of other services reflected the change in the revenue
structure that took place in December 2013; when previously was registered as rental income and with the change of structure
room revenue is coming from the rental of rooms and the rental revenue corresponds to the leasing of public areas.
OPERATING EXPENSES
Operating expenses totaled Ps.562.7 million, or 63.6% of the total revenue, compared to the amounts up to December 31, 2013.
This variation in the operating expenses was mainly due to the greater number of hotels in the portfolio during 2014. The variation
of Ps.535.2 million was the net effect of greater operating expenses due to an increase in the number of hotels acquired; that is:
• An increase of Ps.212.9 million, or 22.4 percentage points corresponding to lodging expenses.
• An increase of Ps.124.3 million, or 10.0 percentage points corresponding to administrative expenses.
• An increase of Ps.59.2 million, or 6.4 percentage points corresponding to a greater energy expenses.
• An increase of Ps.56.0 million, or 6.2 percentage points corresponding to a greater royalty expenses.
• An increase of Ps.40.7 million, or 4.5 percentage points corresponding to greater advertising and marketing.
NET OPERATING INCOME (NOI)
The NOI reached Ps.321.6 million in 2014, representing an annual increase of 83.4%, compared to Ps.175.4 million in
2013. NOI margin for 2014 was 36.4%. The margin reflected greater revenues from the hotels acquired, based on operating efficiency.
INDIRECT EXPENSES
During 2014, expenses incurred for the acquisition of hotels during 2014 reached at total of Ps.64.3 million, which represented 7.3% of total revenue. This expense reflected the accounting treatment in accordance with the application of IFRS 3
Combination of Businesses accounting rule beginning in the fourth quarter of 2014.
In reference to the IFRS 3 Combination of Businesses standard, the acquisition of hotels qualifies as the acquisition of
a business, since an operation is purchased. Therefore, costs related to the transaction are acknowledged in the Income
Statement as they are incurred, these include: costs for notaries, legal and appraisals, among others. This applies to the
acquisition of hotels realized in 2014.
Excluding the expenses from the acquisition of the hotels incorporated during 2014, the administrative expenses totaled
Ps.52.7 million and represented 6.0% of total revenue. This represented a decline of indirect expenses as a percentage of
the revenue for 6.8 percentage points compared to 2013.
Total expenses related to Fibra Inn’s administrative expenses were Ps.117.0 million for 2014 and represented 13.2% of
total revenue, which increased by 40 basis points compared to Ps.26.1 million in 2013, which represented 12.8%. This
variation was mainly due to:
• A decrease of 2.7 percentage points corresponding to the advisory fees
• A decrease of 4.8 percentage points in corporate & administrative expenses
49
ANNUAL REPORT 2014
The financial information presented in this section derived from the Consolidated Audited Financial Statements and accompanying notes, included in this Annual Report, was audited by KPMG Cárdenas Dosal, S.C., Independent Auditor.
• An increase of 7.3 percentage points in acquisition expenses
• An increase of 0.7 percentage points in other expenses
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)
As a consequence of the increase in the operating expenses mentioned above, EBITDA was Ps.204.6 million in 2014,
which equals a margin of 23.1% on Fibra Inn’s revenue.
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
(ADJUSTED EBITDA)
Excluding the expenses related to the acquisition of hotels in 2014, Adjusted EBITDA was Ps.268.9 million, equivalent to a
growth of 80.1%, compared to the Adjusted EBITDA for 2013. The adjusted EBITDA margin was 30.4%.
OTHER NON-CASH ITEMS
Executive compensation based on equity instruments was Ps.18.5 million in 2014. This amount corresponded to the
portion earned from the value of the 3 million CBFIs that was delivered to the former Chief Financial Officer after the Initial
Public Offering was carried out, at the end of a 3-year period, as has been discussed previously. This is a non-cash item,
whose monetary effect will be a dilution of 0.7% beginning March 2016.
During 2014, an accounting depreciation of Ps.108.3 million was registered, derived from the change in the revenue structure. At the beginning of the fourth quarter of 2013, the calculated depreciation of the fixed assets – properties, furnishings and equipment – was incorporated into the results, based on the residual value of the estimated useful life of the net
assets, beginning from the time the asset is available to be utilized. In the present analysis, the depreciation corresponding
to 2013, which was Ps.50.6 million, is incorporated for comparison purposes.
NET INCOME
As a result, the Net Profit for 2014 was Ps.66.7 million. If the expenses from the acquisition of 11 hotels acquired during
2014 were excluded, net income would have been Ps.131.0 million, or 14.8% of the total revenue.
CASH FLOW FROM OPERATIONS (FFO)
Cash flow from operations (“FFO”) was Ps.257.5 million in 2014, which represented 29.1% of the total revenue, an
increase of 24.2% compared to 2013, in which Ps.207.4 million was recorded.
DISTRIBUTION
With regards to distributions, Fibra Inn declared dividends in the amount of Ps.237.1 million, corresponding to the distributions for the first through fourth quarter of 2014, which represented an increase of 29.8% compared to the Ps.182.6
million declared in 2013.
During 2014, expenditures for reimbursements and distributions to the holders of certificates reached Ps.224.1 million.
This included the payment of distributions for the fourth quarter of 2013 and for the first through third quarters of 2014.
This represented Ps.0.7996 cents per CBFI in 2014, which is equivalent to a 13.1% increase compared to the Ps.0.7067
cents per CBFI in 2013. The calculation of the distribution per CBFI in the first through third quarter of 2014 was based
on 258,334,218 outstanding CBFIs. Please note that at the end of 2014, the distribution was based on over 437,019,542
CBFIs after the subscription for the equity increase, and that this was the amount utilized for the calculation of the fourth
quarter 2014 distribution.
Finally, the annual dividend yield for 2014 was 4.9%, based on a closing price of Ps.16.40 per CBFI, which compares favorably to the dividend yield rate of 4.1% for the previous year.
OPERATING INCOME (EBIT)
Therefore, Operating Income decreased by 7.2% at December 31, 2014, with the recording of Ps.77.8 million, or 8.8%, as
a percentage of the total revenue, compared to Ps.83.9 million for 2013.
FINANCIAL INCOME
Net interest expense in the amount of Ps.10.8 million was recorded, mainly derived from temporary credits with Actinver
and Banorte, as well as a negative foreign exchange rate fluctuation of Ps.0.7 million. The net financial result represented
an expense of Ps.11.4 million in 2014, compared to the net financial income of Ps.58.1 million in 2013, which was derived
from the cash position from the Initial Public Offering in 2013 and the absence of financial liabilities in 2013.
51
ANNUAL REPORT 2014
ANNUAL REPORT 2014
50
FINANCIAL SITUATION, LIQUIDITY AND CAPITAL RESOURCES
REVIEW OF CNBV STATUS INDICES
On December 31, 2014, Fibra Inn had Ps.1,106.7 million in cash position. On this date, the total of its bank obligations was
Ps.66.0 million, at a TIIE interest rate plus 2.5%. The initial disbursement of Ps.100.0 million was made on December 17,
2014, to comply with the terms of the contract established with the banks. On December 26, 100% of the credit amount
was covered by contracting an interest rate swap with the banks participating in the credit, both with expiration dates in
March 2019.
With regards to the bank credit, the Trust Guarantee was signed on October 1, 2014, whereby the initial down payment
of 16 hotels, with an appraised value of Ps.3,216.7 million, was made with a fiduciary and collateral (but not mortgage)
guarantee. On October 3, 2014, the Pledge Contract was signed, in which the accounts of the 16 hotels that were pledged
as a guarantee were incorporated.
The financial covenants agreed with the financial institutions with whom the bank credit was contracted, and which are
being fully complied with, are shown below:
FINANCIAL LIMITATIONS
Credit / Value 1
Debt Service 2
NOI / Debt 3
Minimum Coverage 4 Net Tangible Value 5
Total Value of Assets Leverage 6 Equal to or Less than 50% Equal to or Greater than 1.60 Equal to or Greater than 13% Equal to or Greater than 1.20 Greater than 60% Less than or Equal to 55% 1) Outstanding Balance of the Credit in the total value of the hotels pledged in guarantee.
2) NOI of the hotels pledged in guarantee in the Servicing of the Debt, including the simulation of increased amortization for 15 years.
3) NOI of the hotels pledged in Guarantee in the Outstanding Balance of the Credit.
4) NOI of the hotels pledged in Guarantee of the debt plus Obligatory Distributions (Fiscal Results)
5) Total Value of the Assets minus the Outstanding Balance of the Credit in the value of the Assets.
6) Outstanding Balance of the Credit in the Total Value of the Assets.
AS OF DECEMBER 31,
2014
3.1%
20.5
243.6%
20.7
98.7%
1.3%
Level of Indebtedness
Financing
Debt Securities
Total Assets
Debt Index
Debt Servicing Coverage Index
Liquid Assets
Recoverable Value Added Tax Operating Income
Lines of Credit
Sub-Total Numerator
Amortization of Interest
Amortization of Principal
Capital Expenditures
Development Expenses
Sub-Total Denominator
Debt Servicing Coverage Index
AS OF DECEMBER 31, 2014
100.0
–
7,560.5
1.3%
1,106.7
247.5
660.0
2,300.0
4,314.2
11.8
100.0
40.7
390.0
542.5
8.0
OPERATING RESULTS
The same-store sales parameters include the following:
• It includes hotels owned by the F/1616 Trust and its operations, excluding hotels that are in negotiation by a binding agreement in a phase prior to acquisition, and which will not be included until the time their operation is initiated.
The leverage indices established by the CNBV and the itemization of the components that were utilized for the calculation
of these financial considerations are shown below:
• Therefore, the same-store sales indicator for 2014 comprises 22 hotels in the present portfolio as if they had been in Fibra
Inn's portfolio for the complete periods during of both years.
• The hotels that have been in the Fibra Inn portfolio for less than 45 days are excluded. These are: México Plaza Guadalajara
Andares, Crowne Plaza Monterrey Aeropuerto, Casa Grande Chihuahua and Delicias, the four Microtel Inn & Suites by
Wyndham in Chihuahua, Culiacan, Toluca and Ciudad Juarez. Also excluded is the Aloft Guadalajara, which is a recently-built hotel and therefore has no operating history.
53
ANNUAL REPORT 2014
ANNUAL REPORT 2014
52
Fibra Inn had a loan-to-value ratio of 1.3% as of December 31, 2014, which will increase until it reaches a level of 33%
once the total amount of the bank credit is contracted and made available. This level of indebtedness fully meets the
recent provisions of the CNBV (Mexico’s Securities and Exchange Commission), to regulate the maximum limit of indebtedness of REITs by up to 50%. The coverage index for servicing the debt on December 31, 2014 was 20.7 times.
Our most significant operating indicators in terms of comparable properties are the following:
ANNUAL SAME STORE (22 HOTELS)
2014
Revenue from lodging
Occupancy
Average Daily Rate
RevPar
800.5
59.6%
1,016.5
605.9
2013
VARIATION
752.1
61.3%
945.6
579.4
6.4%
-1.7 p.p
7.5%
4.6%
The increase of 7.5% in the average rate compared to 2013 is owed to:
• The benefit from the brand name reconversion of the Mexico Plaza hotels, which operated under the Wyndham Garden
brand in the Irapuato, Celaya, León and Silao hotels. Additionally, the rebranding of the Holiday Inn Monterrey Valle,
which previously operated under the name of Wyndham Casa Grande.
• A better management in the administration of rates of all our hotels during the year, mainly in the Holiday Inn Monterrey
Aeropuerto, Hampton Inn by Hilton in Reynosa, Marriott Puebla, and Camino Real Guanajuato.
As a result, the revenue per available room (RevPAR) reached Ps.605.9, which means a growth of 4.6%, compared to 2013.
If the addition of rooms during 2014 were excluded, the RevPar would have been Ps.619.7, equivalent to a growth of 6.9%.
REVENUES PER REGION
The revenue from lodging in terms of 22 comparable properties was Ps.800.5 million. This represents a 6.4% increase
compared to Ps.752.1 million in the prior year. This significant increase in revenue from lodging is a result of the following:
• The hotels acquired operated with greater efficiency under Fibra Inn than they did when they were operated by their
previous owners; and,
As for the revenues per region: Ps.48.6 million, or 5%, was revenue from the hotels located in the northern region of Mexico;
Ps.305.4 million, or 35% is revenue from the northeast region, Ps.450.4 million, or 51%, corresponds to the properties in the
central and southern regions of the country and Ps.80.0 million, or 9%, corresponds to the western region of Mexico.
• A better performance from the implementation of a strategy aimed at maximizing revenue beginning during the second
half of the year. This has been the result of rate increases.
The revenue per available room (RevPar) in terms of the 22 comparable properties rose 4.6%, reaching Ps.605.9 in 2014.
This was the result of a decrease of 1.7 percentage point in the occupancy rate, which reached 59.6%, offset by an increase
in the average daily rate of 7.5%, or about Ps.1,016.5 in 2014.
The increase in the revenue per available room (RevPar) of 4.6% was explained as follows:
A lower occupancy, which shows:
North
Northeast
Central and Southern
Western
Total Revenues
2013
Ps. million
%
Ps. million
%
48.6
5%
11.6
6%
305.4
35%
93.3
46%
450.4
51%
83.5
41%
80.0 9%14.57%
884.4
100%
202.9
100%
Northern Zone.- Chihuahua and Sinaloa
Northeast Zone.- Nuevo León, Coahuila and Tamaulipas
Central-Southern Zone.- Querétaro, State of Mexico, Puebla, Guanajuato, Quintana Roo, Federal District, Veracruz and Campeche
Western Zone.- Jalisco
54
55
ANNUAL REPORT 2014
2014
ANNUAL REPORT 2014
• A 4.2% increase in the number of available rooms in 2014, due to the rooms that were added from the following hotels:
Holiday Inn Express of Guadalajara, Holiday Inn Express in Playa del Carmen, Camino Real Guanajuato and Marriott
Puebla. Excluding the addition of rooms, the occupancy rate remained practically the same, with a slight variation of 10
basis points.
REVENUES PER REGION
Holiday Inn Monterrey Valle
CONSOLIDATED
FINANCIAL STATEMENTS
Fideicomiso Irrevocable No. F/1616 (Deutsche Bank Mexico, S.A.
Multiple Banking Institution, Trust Division) and Subsidiary
As of December 31, 2014 and 2013
(Independent auditors’ report)
58Independent Auditors’ Report
60Consolidated Statements of Financial Position
61Consolidated Income Statements
62Consolidated Statements of Comprehensive Income
63Consolidated Statements of Changes in Trustors’ Equity
64Consolidated Statements of Cash Flows
65Notes to the Consolidated Financial Statements
ANNUAL REPORT 2014
56
INDEPENDENT AUDITORS’ REPORT
Translation from Spanish language original
To Technical Committee:
Fideicomiso Irrevocable No. F/1616
(Deutsche Bank México, S.A., Multiple Banking Institution, Trust Division):
We have audited the accompanying consolidated financial statements of Fideicomiso Irrevocable No. F/1616 (Deutsche Bank
México, S.A., Multiple Banking Institution, Trust Division) and subsidiary ( the Trust) which comprise the consolidated statements
of financial position as of December 31, 2014 and 2013, the consolidated income statements, comprehensive income, changes in
trustors´ equity and cash flows for the year ended as of December 31, 2014 and the period from March 12, 2013 to December 31,
2013, and notes comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Emphasis of Matter
Without qualifying our opinion, we draw attention to:
As described in the note 1 to the consolidated financial statements, as a result of legislative changes approved to be in force on
January 1, 2014, beginning on December 26, 2013, the Technical Committee of the Trust decided to change the Trust´s activity
from provide hospitality leasing property to provide hotel hosting services.
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance
with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free
from material misstatement.
KPMG CARDENAS DOSAL, S. C.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
C.P.C. Leandro Castillo Parada
Monterrey, Nuevo León, México
March 31, 2015
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
59
ANNUAL REPORT 2014
ANNUAL REPORT 2014
58
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of
Fideicomiso Irrevocable No. F/1616 (Deutsche Bank México, S.A., Multiple Banking Institution, Trust Division) and subsidiary, as
at December 31, 2014 and 2013 , and its consolidated financial performance and its consolidated cash flows for the year ended
as of December 31, 2014 and the period from March 12, 2013 to December 31, 2013 in accordance with International Financial
Reporting Standards.
FIDEICOMISO IRREVOCABLE NO. F/1616 (DEUTSCHE BANK MEXICO, S. A. MULTIPLE BANKING INSTITUTION, TRUST DIVISION) AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
CONSOLIDATED INCOME STATEMENTS
As of December 31, 2014 and 2013
(Mexican Pesos)
For the year ended December 31, 2014 and for the period from March 12, 2013 to December 31, 2013
(Mexican Pesos)
Note
2014
2013
Assets
Current assets:
Cash and cash equivalents
5
$ 1,106,691,219
Trade and other accounts receivable
6
82,880,028
Accounts receivable from related parties
11
54,119,620
Recoverable value-added tax
247,489,379
Recoverable taxes and others
8,917,183
385,639,741
6,813,723
42,725,455
142,821,221
7,739,688
Total current assets
1,500,097,429
585,739,828
Property, furniture and equipment, net
Deferred income taxes
Intangible assets and other assets
6,041,103,702
321,886
18,954,965
4,296,168,118
74,861
–
8
13
10
$ 7,560,477,982 4,881,982,807
Liabilities and trustor´s equity
Current liabilities:
Suppliers $
Other payables
Other contributions payable
Property acquisition liability
9
Accounts payable to related parties 11
Bank charges due to bank 16
Client prepayments
53,301,237
4,025,327
13,105,012
144,654,899
67,343,389
10,700,694
4,783,497
11,339,095
4,856,177
–
275,500,000
10,000,159
–
168,057
Total current liabilities
297,914,055
301,863,488
4,600,000
2,044,222
66,029,307
893,193
231,428
–
2,044,222
–
–
246,397
Bank charges due to bank Long-term accounts payable to related parties
Bank loans
Derivative financial instruments
Employee benefits
16
11
16
15
14
Total liabilities
304,154,107
12
11 d
6,991,560,906
33,369,622
4,457,967,374
14,869,623
15
12
(893,193)
164,728,442
–
104,991,703
60
Total trustors´ equity
7,188,765,777
4,577,828,700
ANNUAL REPORT 2014
Trustors´ equity:
Contributed capital
Executive share-based compensation reserve Reserve for valuation effect of derivative
financial instruments
Retained earnings
371,712,205
$ 7,560,477,982 4,881,982,807
Note
2014
2013
Revenue from:
Lodging
$ 832,151,025
Property leases
11
52,121,853
Other operating income
11
–
8,748,822
166,942,188
27,220,530
Total revenue
884,272,878
202,911,540
Costs and expenses from hotel services: Lodging
11
217,275,688
Administrative 11
135,067,416
Advertising and promotion
11
41,032,923
Electricity
59,977,801
Maintenance
11
44,290,280
Royalties
56,346,815
4,405,271
10,725,668
334,647
771,014
7,888,522
341,472
Total costs and expenses from hotel services
553,990,923
24,466,594
Gross margin
330,281,955
178,444,946
Other costs and expenses (income):
Property tax
5,694,911
Insurance
2,993,680
Advisor fee
11
26,428,680
Corporate expenses 11
28,409,360
Depreciation 8
108,256,594
Executive share-based compensation
11 d
18,499,999
Costs from business acquisitions
3 m
64,338,383
Other income, net
(2,172,226)
1,865,140
1,186,461
11,594,350
16,336,927
50,563,380
14,869,623
–
(1,866,744)
Total costs and expenses
94,549,137
252,449,381
Operating income
77,832,574
83,895,809
Interest expense (income), net
Loss (gain) on exchange rate fluctuation, net 10,751,057
674,753
(41,106,230)
(16,966,760)
Finance expense (income)
11,425,810
(58,072,990)
Income before income taxes
66,406,764
141,968,799
247,025
74,861
Income taxes
13
Consolidated net income
$
66,653,789
142,043,660
Basic earnings per CBFIs * 0.15
0.55
Diluted earnings per CBFIs *
0.15
0.54
437,019,542
258,334,218
Weighted average of outstanding CBFIs
12
* Real Estate Fiduciary Stock Certificates (Certificados Bursátiles Fiduciarios Inmobiliarios – “CBFIs”)
See accompanying notes to consolidated financial statements.
61
ANNUAL REPORT 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENTS OF CHANGES IN TRUSTORS’ EQUITY
(Mexican Pesos)
(Mexican Pesos)
Note
Net income
$
2014
66,653,789
2013
142,043,660
Comprehensive income items:
Reserve for valuation effect of derivative financial
instruments
15
Total comprehensive income
$
(893,193)
65,760,596
–
142,043,660
Reserve for
valuation
Executive
effect of
share-based derivative
Contributed
compensation financial
Retained Note capital
reserve instruments
earnings
Initial contributed capital
12 $
20,000
Contributed capital
12 4,541,783,920
Reimbursements and distributions
to holders of certificates
12
(83,836,546)
Equity-settled share-based
compensation
11 d
–
Comprehensive income
–
Total
Trustors’
equity
–
–
–
–
–
–
20,000
4,541,783,920
–
–
(37,051,957)
(120,888,503)
14,869,623
–
–
–
–
142,043,660
14,869,623
142,043,660
Balance as of December 31, 2013 4,457,967,374
14,869,623
–
104,991,703
4,577,828,700
Contributed capital
12 2,750,810,570
Reimbursements and distributions
to holders of certificates
12 (217,217,038)
Equity-settled share-based
compensation
11 d
–
Comprehensive income
–
–
–
–
2,750,810,570
–
–
(6,917,050)
(224,134,088)
18,499,999
–
–
(893,193)
–
66,653,789
18,499,999
65,760,596
Balance as of December 31, 2014 $ 6,991,560,906
33,369,622
(893,193) 164,728,442
7,188,765,777
62
63
ANNUAL REPORT 2014
ANNUAL REPORT 2014
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Mexican Pesos)
(Mexican Pesos)
Note
2014
2013
Operating activities:
Consolidated income before taxes
$
66,406,764
141,968,799
Adjustments:
Depreciation 8
108,256,594
50,563,380
Executive share-based compensation 11 d
18,499,999
14,869,623
Operating activities
193,163,357
207,401,802
Increase in trade and other accounts receivable 6
Related parties 11
Increase in recoverable taxes
Increase in suppliers and other payables
Increase in other contributions payable
Employee benefits
14
(77,243,800)
45,949,065
(104,668,158)
45,746,732
13,105,012
(14,969)
(6,813,723)
(30,661,074)
(150,560,909)
291,863,329
–
246,397
Net cash flows generated by operating activities
116,037,239
311,475,822
Investing activities:
Acquisition of property, furniture and equipment
8 (1,984,037,279) (4,346,731,498)
Acquisition of intangible assets 10
(18,954,965)
–
Net cash flows generated by investing activities
Net cash flows generated by financing activities
2,608,006,483
4,420,895,417
Cash and cash equivalents:
Increase in cash and cash equivalents during the period
721,051,478
385,639,741
Cash at the end of the period
5
Trust F/1616 (Deutsche Bank Mexico, S. A. Multiple Banking Institution, Trust Division) and Subsidiary (“Fibra INN” or the
“Trust”) was established on October 23, 2012, as a real estate trust by Asesor de Activos Prisma, S.A.P.I de C.V.(the “Trustor”),
Deutsche Bank México, S.A., Multiple Banking Institution, Trust Division (the “Trustee”). The Trust started operations on March
12, 2013 and was created mainly to acquire and own real estate, with a view to leasing commercial properties earmarked for
the hospitality industry and providing related services.
Fibra INN, as a real estate investment trust (Fideicomiso de Inversiones en Bienes Raices – “FIBRA”), meets the requirements
to be treated as a transparent entity in Mexico in accordance with the Mexican Income Tax Law. Therefore, all proceeds from
the Trust’s operations are attributed to holders of its Real Estate Fiduciary Stock Certificates (Certificados Bursátiles Fiduciarios
Inmobiliarios – “CBFIs”) and the Trust F/1616 is not subject to income taxes in Mexico. In order to maintain its FIBRA status,
the Tax Administration Service (Servicio de Administración Tributaria -–“ SAT”) established, in Articles 223 and 224 of the
Income Tax Law for the period of 2013, that the Trust must annually distribute at least 95 percent of its net tax result to CBFIs
holders. In accordance with the new Income Tax Law 2014, the articles related to the tax requirements of a FIBRA are 187and
188, which sustain the same characteristics as the previous law.
Administradora de Activos Fibra INN, S.C. (AAFI) is a subsidiary of Fibra INN, in which it holds a 99.9% ownership interest and
has control, as defined in note 2c. This entity provides support functions necessary to conduct the businesses of the Trust.
The Trust’s legal address is Ricardo Margain Zozaya No. #605, Colonia Santa Engracia, in San Pedro Garza García, Nuevo León.
–
–
–
4,541,783,920
(120,888,503)
5
1. COMPANY’S ACTIVITY–
(2,002,992,244) (4,346,731,498)
Financing activities:
Bank loans received
16 1,000,000,000
Bank loans paid
16
(900,000,000)
Bank charges due to bank 16
(18,669,999)
Contributed capital
12 2,750,810,570
Distributions to holders of certificates
12
(224,134,088)
Cash at the beginning of the period
Translation from Spanish language original
385,639,741
–
$ 1,106,691,219
385,639,741
For the development of its operation, Fibra INN has entered into the following contracts with related parties:
i.Advisory services on acquisition, management and development of assets with Asesor de Activos Prisma, S. A. P. I. de C.
V. Management consulting services are permanent for all hotels that comprise the equity of the Trust, and are determined
by the value of the related assets. In the General Holders Meeting held on October 17, 2014, a resolution to modify the
percentage applied to the value of assets in determining the fees from advisory on management was reached, remaining a
0.75% over the gross value of real estate assets, adjusted by inflation. The advisory services on acquisition and development
are performed once for all hotels acquired and developed, and are determined by the agreed purchase price or developed
property, as applicable. Additionally, in the General Holders Meeting held on October 17, 2014 a resolution to eliminate
the fee from advisory services on acquisition and development of assets was reached. This resolution will be applicable in
respect of the assets whose acquisition is approved after October 17, 2014. The stated term for this contract is 10 years.
ii.Hotel management services contract with Gestor de Activos Prisma, S.A.P.I. de C.V. The hotel management services are
permanent, for the corresponding hotels (some hotels contract with third-party hotel management services). These services
were provided since December 26, 2013 and the stated term of the contract is 10 years.
ANNUAL REPORT 2014
64
65
iii.Personal services contracts with Servicios Integrales Fibra INN, S.A.P.I. de C.V. and Impulsora Fibra INN, S.A.P.I. de C.V.
ANNUAL REPORT 2014
iv.Space rental contract with Operadora México Servicios y Restaurantes, S.A.P.I. de C.V. Lease of spaces effective since December
26, 2013. Spaces granted as leases are those used to provide other services different to lodging services. The term of this
contract is 20 years.
2. AUTHORIZATION AND BASIS OF PRESENTATION–
Significant events–
The accompanying consolidated financial statements were authorized for issuance on March 31, 2015, by Ing. Oscar Eduardo
Calvillo Amaya, Chief Executive Officer, and are subject to the approval of the Technical Committee, represented by Ing. Victor
Zorrilla Vargas as its President and which may modify such financial statements.
1.As a result of the legislative changes contained in the new Income Tax Law, which are effective on January 1, 2014, the
Technical Committee of Fibra INN decided to carry out changes to the Trust’s activities with two main objectives: (i) maintain
strict adherence to the provisions of the new Income Tax Law, and (ii) avoid material impacts that may affect the profitability
of Fibra INN. The changes made to the Trust’s activities, fully complies with the provisions of Articles 187 and 188 of the new
Income Tax Law as well as those prescribed by the Article 223 and 224 of the Income Tax Law in force through December 31,
2013 and Rule I.3.20.2.5 of the Miscellaneous Tax Resolution for 2012, as it relates of properties designated for lodging.
Based on the above mentioned, the Technical Committee of Fibra INN decided to implement the following changes in its
activity:
Authorization–
Basis of presentation –
a. Statement of compliance
The consolidated financial statements of Fibra INN have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
b.Basis of measurement
a)Starting from December 26, 2013, lodging services of the hotels will be recognized and invoiced directly by the Trust
F/1616, which will pay the expenses related to lodging as well. According to the Rule 1.3.20.2.5 of the Miscellaneous Tax
Resolution for 2012, lodging revenues are considered as leasing revenues.
The Trust’s consolidated financial statements have been prepared on the basis of historical cost, except for the following items
of the consolidated statement of financial position, which were measured at fair value:
b)Starting from December 26, 2013, for services that do not arise from lodging, for both selected and limited service hotels,
as well as full service hotels, which comprise the use of meeting rooms, coffee break services, telephone, laundry, dry
cleaner and snack bars, among others, Fibra INN will lease the properties directly from the operator. For these effects, the
Trust has entered into a lease contract for each of its hotels with Operadora México, Servicios y Restaurantes, S.A.P.I de
C.V. (“Operadora México”). Thus, the Trust will have revenues for leasing of properties and the rendering of services other
than lodging will be transferred to Operadora México.
a)derivative financial instrument;
c)Starting from December 26, 2013, for the specific case of full service hotels, the revenue of services other than lodging
will be recognized and invoiced by a new Trust F/1765. This entity will pay the direct inputs and related expenses with the
rendering of such services. It will also pay the payroll and related expenses to the personal needed to render the services.
Fibra INN will receive revenue for property leasing based on a fixed monthly rent plus a variable component ranging
between 10% and 25% of the revenue generated from the abovementioned services.
c.Basis of Consolidation
The purpose for the incorporation of the Trust F/1765 is the existence of a third entity to receive the amounts of revenue
on which the percentage to determine the variable portion of the rent to be obtained from the different hotels, will
be applied.
b)the net defined benefits liability is recognized as the fair value of plan assets, less the present value of the defined benefits
obligation.
The historical cost is generally based on the fair value of the consideration granted in exchange of the assets.
The consolidated financial statements include those of Fibra INN and those of its subsidiary, Administradora de Activos Fibra
INN, S.C., of which it holds a 99.9% of capital stock and where it holds control. Control is achieved when Fibra INN:
•has power over the investee;
•is exposed, or has rights, to variable returns from its involvement with an investee; and
•has the ability to affect those returns through its power over the investee.
Balances and transactions with the subsidiary company have been eliminated in the consolidated financial statements.
ANNUAL REPORT 2014
66
Fibra INN reassessed whether it holds control on the service entities that are mentioned in Note 1, and concluded that in
accordance with IFRS 10 “Consolidated Financial Statements” it does not control such entities since it does not have the
power to decide over the management of their relevant activities; as well as the fact that key operating decisions rely on the
shareholders of those entities and not on Fibra INN, therefore, no control relationship exists.
d. Local, functional and reporting currency
3.On November 21, 2014, Fibra INN concluded the process of issuing additional CBFIs to existing holders, subscribing a total of
178,685,324 new CBFIs, at a price of $15.85 for a total of $2,832,162,385.
The functional currency of the Trust is the Mexican peso, which is the same to its local and reporting currencies.
67
ANNUAL REPORT 2014
2.On September 9, 2014, the Trust entered into a line of credit for $2,300,000,000 of pesos to finance its property acquisition
and development expansion plan. The institutions participating in the line of credit are: Banorte, Actinver, Banamex, BanRegio
and Scotiabank. This bank debt is located in a cash credit line account that has a fiduciary and pledge collateral, with a term of
54 months and payable at maturity. The agreed interest rate is TIIE plus 2.5% for the first three years, plus two increases: an
additional 0.25% during months 37 to 45 and a 0.5% additional increase during months 46 to 54. As of December 31, 2014
the amount outstanding is $100,000,000.
e.Income statement and comprehensive income statement
Financial assets are classified according to the following specific categories: financial assets at fair value through profit or loss,
investments, and loans and accounts receivable. Classification depends on the nature and the purpose of the financial assets
and is determined at the time of initial recognition.
Costs and expenses presented in the consolidated income statement were classified according to their nature.
Fibra INN shows line items of gross margin and operating income since they are considered important performance indicators
for the users of financial information. Income and expenses are presented based on their nature.
The Trust presents in the statement of comprehensive income those accounting items that were already accrued but are still
pending to be realized.
f. Statement of cash flows
Financial assets
Cash and cash equivalents
Cash and cash equivalents consist mainly of bank deposits in checking accounts and short-term investments. Cash is stated
at nominal value and cash equivalents are valued at fair value. The Trust considers as cash equivalents all highly liquid
debt instruments purchased with an original maturity of three months or less. Cash equivalents are represented mainly by
government bonds whose proceeds are payable at maturity.
Fibra INN presents its statement of cash flows using the indirect method.
Trade accounts receivable and accounts receivable from related parties
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –
The Trust’s significant accounting policies are as follows:
Trade accounts receivable and other accounts receivable whose payments are fixed or can be determined, and which are not
traded on an active market are classified as loans and accounts receivable. Loans and accounts receivable are recognized at
amortized cost using the effective interest method, and are subject to impairment tests.
a.Financial instruments–
Financial assets and financial liabilities are recognized when the Trust is subject to the underlying instrument’s contractual
terms.
Financial assets other than the financial assets valued at fair value through profit or loss are subject to impairment tests at the
end of each reporting period. Financial assets are deemed impaired when there is objective evidence that, as a consequence of
one or more events occurring after the initial recognition of the financial asset, the estimated future cash flows of the financial
asset have been affected. For financial assets recorded at amortized cost, the amount of impairment loss recognized is the
difference between the carrying amount of the asset and the present value of future collections, discounted at the original
effective interest rate of the financial asset.
Financial assets and liabilities are initially recognized at fair value. Transaction costs directly attributable to the acquisition or
issuance of a financial asset or liability (other than the financial assets and liabilities recognized at fair value through profit or
loss) are added or deducted from the fair value of financial assets or liabilities, if any, upon initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial liabilities at fair value with changes in profit or loss are
immediately recognized in the consolidated income statement. Financial assets and liabilities are offset and the net amount is
presented in the statement of financial situation when and solely when, the Company has the legal right to offset the amounts
and intends to either settle on a net basis, or realize the asset and settle the liability simultaneously.
The subsequent valuation of the financial instruments depends on the category in which they are classified. The accounting
treatment for each category of financial instruments is described as follows:
As of the date of these consolidated financial statements, the Trust maintains instruments classified as suppliers, other payables,
related parties, loans and receivables, as well as investments in government bonds as part of cash equivalents.
Equity instruments
An equity instrument is any contract showing a residual share in the Trust’s net assets. Equity instruments issued by Fibra INN
are recognized according to the amount received, net of direct issuance costs.
When contributions are made to the Trust or it acquires properties that do not represent a business, in exchange for its equity
instruments, the transaction is recorded as a share-based payment to third parties (other than to employees) payable through
equity instruments and is measured based on the fair value of goods received, except when such value cannot be estimated
reliably. Effects on the financial position are shown in the statement of changes in Trustors’ equity as “equity contributions”
and do not have an impact on the results of the period.
Fair value of financial instruments
ANNUAL REPORT 2014
68
The fair value of financial instruments that are traded in active markets will be determined by reference to quoted prices in such
markets or market rate prices of the seller (bid-price for long positions and ask-price for short positions), without deducting
any transaction costs. For financial instruments that are not traded in an active market, the fair value is obtained by using
appropriate valuation techniques. These techniques may include the use of recent market transactions between independent
parties; reference to the fair value of other substantially similar financial instruments, cash-flows discount analysis or other
valuation models.
Financial liabilities
Financial liabilities are classified as financial liabilities at fair value through profit or loss, or other financial liabilities.
Other financial liabilities, including loans, are initially recognized at fair value, net of transaction costs and are subsequently
valued at amortized cost using the effective interest method, and interest expenses are recognized on an effective return base.
69
ANNUAL REPORT 2014
Impairment of financial assets
The effective interest rate method is a method for the calculation of the amortized cost of a financial liability and of the
assignment of the financial expense along the period concerned. The effective interest rate is the rate that exactly discounts
the estimated cash payments along the expected life of the financial liability (or, where adequate, in a shorter period) which
represents the net amount in books of the financial liability at its initial recognition.
When components of an item of property, furniture and equipment have different useful lives, these are accounted for
separately (main components).
Property, furniture and operating equipment of the hotels are presented at cost less accumulated depreciation and any
accumulated impairment losses.
De-recognition of financial liabilities
Fibra INN measures and records all operations with derivative financial instruments in the consolidated statements of financial
position as either an asset or liability at fair value, regardless of the purpose of holding them. At the inception of the hedge
accounting relationship of a derivate financial instrument, the Trust reviews that all hedge accounting requirements are
complied, and documents its designation at the inception of the operation, describing the objective, characteristics, accounting
treatment and the way how the measurement of effectiveness will be carried out, applicable to that operation.
Estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, and the
effect of any change in the estimates recorded is recognized on a prospective basis.
Derivatives designated as cash flow hedges recognize valuation changes corresponding to the effective portion temporarily in
other comprehensive income and in profit or loss when the hedged item affects it, while the ineffective portion is recognized
immediately in profit or loss, because due to the risk management strategy profile of Fibra INN.
Buildings
Components of buildings
Furniture and equipment
Machinery and equipment
Hedge accounting is discontinued when Fibra INN revokes the hedging relationship, when the hedging instrument expires
or is sold, terminated, or exercised, when it no longer qualifies for hedge accounting or effectiveness is not high enough to
compensate changes in fair value or cash flows of the hedged item, or when the Trust decides to cancel the hedge designation.
When discontinuing cash flow hedge accounting, any gain or loss recognized in other comprehensive income and accumulated
in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in profit
or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized
immediately in profit or loss. Where a hedge for a forecasted transaction is proved satisfactory and subsequently does not meet
the effectiveness test, the cumulative effects in other comprehensive income in equity are recognized in proportion to profit or
loss, to the extent that the forecasted asset or liability affects it.
ANNUAL REPORT 2014
Years
66
8
12
14
The depreciation method, the useful lives and the residual values are reviewed at the end of each reporting period and are
adjusted, if necessary.
An item of property, furniture and equipment is derecognized on disposal or when no future economic benefits are expected
from its use or disposal. The gain or loss arising from de-recognition of an item of property, furniture and equipment is
determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item. The gain or loss
is recognized on a net basis within the other costs and expenses line item.
b. Property, furniture and equipment–
c. Intangible assets–
Property, furniture and operating equipment of the hotels are initially recognized at their acquisition cost. Cost includes
expenditures directly attributable to the acquisition of the assets, costs of bringing the assets to conditions intended for its use
and capitalized borrowing costs.
Intangible assets that are acquired by the Trust, and which have finite useful lives, are recorded at cost less accumulated
amortization and accumulated impairment losses; these assets mainly include the cost of software for administrative use that
has not started to be amortized since it is in its development stage. Other intangible assets include use of trademark licenses
and expenses related to its grant. The factor to determine their useful lives is the estimated time of use, according their
contractual terms. The estimated useful lives and amortization method are reviewed at the end of each year, and the effect of
any change in the recorded estimate is recognized prospectively.
An item of property, furniture and equipment, is recognized when the inherent risks and benefits to the use that Fibra INN
intends to give to that asset, are acquired.
70
The estimated useful life of property, furniture and equipment is the following:
Improvements that have the effect of increasing the asset’s value, either because they increase the capacity of service, improve
efficiency or extend the asset’s useful life, are capitalized once it is probable that the future economic benefits will flow to
Fibra INN and the costs may be reliably estimated. All maintenance and repairing costs that do not meet the requirements to
be capitalized are recognized in profit or loss.
d. Impairment of long-lived assets–
At the end of each reporting period, Fibra INN reviews the book values of its long-lived assets to determine if there is any
indicator that those assets have suffered any impairment loss at the end of each reporting period. If there is any indicator, the
recoverable amount of the asset is calculated in order to determine the extent of the impairment loss, if they exist. When it
is not possible to estimate the recoverable amount of an individual asset, Fibra INN estimates the recoverable amount of the
71
ANNUAL REPORT 2014
The Trust derecognizes off financial liabilities if, and solely if, obligations are met, cancelled or expired.
Depreciation is calculated using the straight-line method based on the estimated useful lives of the assets net of its residual
values, at the moment that the asset is available for its intended use. Fibra INN has determined that the residual values of
its assets of property, furniture and equipment, are not greater than zero, given that there is no expectation to obtain future
economic benefits through sale.
cash generating unit to which such asset belongs. The recoverable amount of an asset is the higher of its fair value less costs
of disposal and its value in use. When evaluating the value in use of an asset, the future estimated cash flows are discounted
to its present value using a pre-tax discount rate that reflects the actual evaluation of the market in respect to the time value
of money and the specific risks of the asset for which estimates of future cash flows have not been adjusted.
If it is estimated that the recoverable amount of an asset (or cash-generating unit) is less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognized in profit
or loss within the other costs and expenses line item.
When an impairment loss is reversed subsequently, the carrying amount of the asset (or cash-generating unit) is increased
to the revised estimate of its recoverable amount, in such a way that the increased carrying amount does not exceed the
carrying amount that would have been determined if an impairment loss had not been recognized for such asset (or cashgenerating unit) in prior years. The reversal of an impairment loss is immediately recognized in profit and loss within the
other costs and expenses line item. During the periods ended December 31, 2014 and 2013, Fibra INN did not recognized
impairment losses.
e.Provisions–
Provisions are recognized when there is a present obligation as a result of a past event, which will probably result in an outflow
of economic resources, and can be reasonably estimated. For purposes of accounting, the amount is discounted to present
value when the discount effect is significant. Provisions are classified as current or non-current based on the estimated period
to meet the obligations that are covered. When the recovery from a third party is expected for some or all of the economic
benefits required to settle a provision, an account receivable is recognized as an asset if it is virtually certain that the payment
will be received and the amount of the account receivable can be valued reliably.
voluntary retirement, the offer is likely to be accepted, and the number of acceptances can be estimated reliably. If the
benefits are payable no later than 12 months after the reporting period, then they are discounted at present value.
iii.Short-term benefits–
Short-term employee benefit obligations are valued on a basis without discount and are expensed as the respective
services are rendered. A liability is recognized for the amount expected to be paid under short-term cash bonuses plans
if the Trust has a legal or assumed obligation to pay these amounts as a result of past services provided by the employee
and the obligation can be estimated reliably.
g.Revenue recognition–
Starting from December 26, 2013 revenue is obtained by the operation of hotels and includes rental of rooms (lodging) and
rental of property, which are recognized when the services are rendered.
Starting from December 26, 2013 Fibra INN recognizes revenue for leasing of rooms (lodging) in the income statement as
identified by its legal form. Nevertheless, such revenue is recognized in accordance to the recognition criteria for the rendering
of services, that is, when the amount and the costs of the transaction can be measured reliably; it is probable that the economic
benefits associated with the transaction will flow to the entity and the lodging services have been rendered.
f. Employee benefits–
Revenue from property leasing is recognized for the rents obtained. These revenues are recognized on a straight-line basis
over the terms of the contract at the moment in which the service is accrued, when the amounts and the costs related to the
transaction can be measured reliably and it has been determined that is probable that the economic benefits will flow to the
Trust. The term of the lease is the non-cancellable period, together with any further terms for which the lessee has the option
to continue to lease the asset, when at the inception of the lease, Fibra INN is reasonably certain that the lessee will exercise
the option.
i.
h. Income taxes–
Defined benefit plans–
A defined benefit plan is a benefit plan at the end of a labor relationship different from one of defined contributions.
The Trust’s net obligations with respect to the defined-benefit plan are calculated estimating the amount of future
benefit accrued by employees in return for their services in ongoing and past periods; that benefit is discounted to
determine its present value, and the costs for past services are deducted. The discount rate is the yield at the reporting
date of the government bonds that have maturity dates approximate to the maturities of the Trust’s obligations which are
denominated in the same currency in which benefits are expected to be paid. The calculation is performed annually by a
qualified actuary using the projected unit credit method.
Fibra INN recognizes the actuarial gains and losses arising from the defined benefit plans in the income statement, in the
period in which they occur.
As mentioned in Note 1, the Trust F/1616 is eligible for and intends to maintain its current status as a “Fideicomiso de
Inversiones en Bienes Raices” (FIBRA or REIT in English) for income tax purposes and, therefore, does not recognize a provision
for income taxes. However its subsidiary is subject to income taxes and therefor the consolidated financial statements reflect
the associated impacts. Deferred income taxes are recognized over the temporary differences between the carrying amount
of assets and liabilities included in the financial statements, and their corresponding tax values, which are used to determine
the tax result, applying the corresponding tax rates to these differences.
A deferred tax asset is recognized for all deductible temporary differences, to the extent probable that Fibra INN dispose
of future taxable profit against which the deductible temporary differences can be utilized. These assets and liabilities are
not recognized when the temporary differences arise from goodwill or the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that does not affect the accounting or tax result.
ii.Termination benefits–
Fibra INN does not recognize a deferred tax liability for the temporary differences related to the investment in subsidiary as
it controls the reversal of such temporary differences, and it is not probable that they will be reversed in a foreseeable future.
Deferred tax assets arising from temporary differences associated to such investment and interests are recognized only to the
extent that it is probable that sufficient taxable profit will be available against which the temporary difference can be utilized
and the temporary difference is expected to reverse in the foreseeable future.
73
ANNUAL REPORT 2014
ANNUAL REPORT 2014
72
Termination benefits are recognized as an expense when the Trust’s commitment can be evidenced, without real possibility
of reversing, with a detailed formal plan either to terminate employment before the normal retirement date, or else, to
provide benefits for termination as a result of an offer that is made to encourage voluntary retirement. The benefits
from termination in cases of voluntary retirement are recognized as an expense, solely if the Trust has made an offer of
i. Foreign currency transactions–
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY–
Foreign currency refers to currency different to Fibra INN’s functional currency. Foreign currency transactions are recorded at
the applicable exchange rate in effect at the transaction date. Monetary assets and liabilities denominated in foreign currency
are translated into Mexican pesos at the applicable exchange rate in effect at the date of the financial statements. Exchange
fluctuations are recorded in the consolidated income statement.
In the application of the accounting policies of Fibra INN, as described in note 3, management is required to make judgments,
estimates and assumptions about the carrying amount of certain assets and liabilities that are not easily available by other sources.
Estimates and associated assumptions are based on historical experience and other factors considered relevant. The actual results
may differ from these estimates.
j. Share-based payments–
The related estimates and assumptions are reviewed continuously. Changes to accounting estimates are recognized in the period
in which the estimate is changed if the change affects solely that period, or the current period and future periods if the change
affects both current and future periods.
Payments to employees that are made with equity shares are measured at fair value of the equity instruments at the date of
grant. The fair value, determined at the grant date of the payment based on equity, is recognized in profit or loss based on
the straight-line method over the period when the employee provides the related service, based on the estimate of equity
instruments that management believes the employee will ultimately acquire, with a corresponding increase in equity. At the
end of each reporting period, the Trust revises its estimate of the number of equity instruments that are expected to vest.
The impact of the review of the original estimates, if any, is recognized in the income of the period such that the cumulative
expense reflects the reviewed estimate, with a corresponding adjustment in equity.
a. Critical judgments in the application of accounting policies–
The following are the critical judgments, other than those involving estimates (see below), that management has developed
in the process of applying the accounting policies of Fibra INN and which have the most significant effect on the amounts
recognized in the consolidated financial statements.
k. Basic and diluted earnings per CBFIs–
Classification of leases–
Basic earnings per CBFI are determined by dividing the consolidated income with the weighted average of outstanding CBFIs
of the period. Diluted earnings per CBFIs are determined by adding to the number of outstanding CBFIs during the period,
437,019,542 the 3,000,000 CBFIs correspondent to the equity-based compensation (see note 11d), which will vest if certain
conditions established for the eligible executives are met.
Leases are classified according to the extent that risks and rewards of ownership of the leased asset are transferred to Fibra
INN or the lessee, based on the substance of the transaction, rather than its legal form. Based on an evaluation of the terms
and conditions of the agreements, Fibra INN has determined that it maintains substantially all the risks and significant rewards
of ownership of these goods and, therefore, classifies its leases as operating leases.
l. Segment information–
Business combinations or acquisition of assets–
Operating segments are defined as components of an entity, oriented to the rendering of services that are subject to risks and
benefits. The Trust is mainly involved in four segments: Northeast, South Central, West and North.
Management uses its professional judgment to determine if the acquisition of a group of assets represents a business
combination. Such determination may have a significant impact in how the acquired assets and assumed liabilities are
accounted for, both at the initial recognition and subsequently.
Income taxes–
Business operating segments are grouped according to the geographical areas where they operate. For internal and
organizational purposes, each segment performs the administration and supervision of all of its activities, which refer to the
rendering of lodging services and leasing of properties. Accordingly, management of Fibra INN internally evaluates the results
and performance of each business for purposes of decision-making. Following this approach, in the daily operations, economic
resources are allocated on an operational basis for each segment.
m. Business combinations–
In order to continue to be eligible as a FIBRA for income tax purposes, the Trust must comply with certain requirements of this
tax regime, which relate to issues such as the annual distribution of at least 95% of taxable income. According to the Trust, it
will continue to be eligible under the FIBRA tax regime.
b. Main sources of estimation uncertainty in the assumptions–
The following are the key assumptions about the future and other key sources of estimation uncertainty at the end of the
reporting period, which have a significant risk to result in a material adjustment to the carrying amount of assets and liabilities
on the next financial period.
Useful lives and residual values of property, furniture and equipment–
ANNUAL REPORT 2014
74
75
Useful lives and residual values of items of property, furniture and equipment are used to determine the amortization and
depreciation of assets and are defined according to the analysis by internal and external specialists. Useful lives are periodically
reviewed, at least once a year, and are based on the current conditions of assets and the estimate of the period during which
ANNUAL REPORT 2014
Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination
is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred to Fibra
INN plus liabilities incurred by Fibra INN to the former owners of the acquiree and the equity interests issued by Fibra INN in
exchange for control of the acquire at the acquisition date. Acquisition-related costs are generally recognized in profit or loss
as incurred. At the acquisition date, identifiable assets acquired and liabilities assumed are recognized at fair value.
they will continue to generate economic benefits to the Trust. If there are changes in the estimate of useful lives, the net
carrying amount of assets is affected prospectively, as well as the corresponding depreciation expense.
Impairment of long lived assets–
The carrying amount of long-lived assets is reviewed for impairment in case that situations or changes in the circumstances
indicate that it is not recoverable. If there are impairment indicators, a review is carried out to determine whether the carrying
amount exceeds its recoverability value and whether it is impaired. In the impairment evaluation, assets are grouped in the
cash generating unit to which they belong. The recoverable amount of the cash generating unit is calculated as the present
value of future cash flows that the assets are expected to produce. There will be impairment if the recoverable value is less
than the carrying amount.
Fibra INN defines the cash generating units at the individual hotel level and also estimates the periodicity and cash flows
that it should generate. Subsequent changes in grouping cash generating units, or changes in the assumptions underlying the
estimate of cash flows or the discount rate, could impact the carrying amounts of the respective assets.
6. TRADE AND OTHER ACCOUNTS RECEIVABLE–
Clients for hotel services
$
Other accounts receivable
$
2014
2013
70,482,980
12,397,048
4,241,667
2,572,056
82,880,028
6,813,723
Accounts receivable aging:
Fibra INN has not recognized an impairment in its receivables since it considers that all are recoverable.
7. PORTFOLIO OF HOTELS
Calculations of value in use require the Trust to determine the cash flows generated by the cash generating units and an
appropriate discount rate to calculate its present value. Fibra INN uses cash flows projections based on market conditions
as part of its critical assumptions. In the same way, for purposes of the discount rate and the perpetuity growth, market risk
premium indicators are used and long-term growth expectations for the markets in which Fibra INN operates.
Defined benefit plans–
Fibra INN uses assumptions to determine the best estimate for these benefits. Assumptions and estimates are established in
conjunction with independent actuaries. These assumptions include demographic hypothesis, discount rates and expected
increases in remunerations and future permanence, among others. Although the assumptions are deemed appropriate, a
change in such assumptions could affect the value of the employee benefit liability and the results of the period in which
it occurs.
5.CASH AND CASH EQUIVALENTS–
2014
Cash in banks
$
222,237,925
Cash equivalents (government bonds)
884,453,294
Total cash and cash equivalents
$ 1,106,691,219
2013
11,119,534
374,520,207
Contributed Portfolio–
In March 2013, Fibra INN held an initial public offering (“IPO”) of CBFIs in Mexico and other international markets, and entered
into a series of “constitution/establishment transactions” whereby eight properties were contributed to the Trust in exchange for
CBFIs. Properties included in the contributed portfolio are as follows:
Acquisition
Properties
CBFIs (1)
cost
Hampton Inn Galerías Monterrey
12,015,747 $ 222,291,320
Hampton Inn Querétaro
11,609,890
214,782,965
Hampton Inn Saltillo
15,607,634
288,741,229
Holiday Inn Express Saltillo
14,058,791
260,087,634
Holiday Inn Express Toluca
18,162,779
336,011,412
Holiday Inn Express Juárez
9,858,177
182,376,275
Hampton Inn Reynosa
2,249,436
41,614,566
Holiday Inn Express Monterrey
12,319,736
227,915,114
$ 1,773,820,515
385,639,741
(1)
Properties making up the contributed portfolio were contributed by Adhering Trustors in exchange for 95,882,190 CBFIs.
76
77
ANNUAL REPORT 2014
ANNUAL REPORT 2014
Article 187 clause III of the New Mexican Income Tax Law establishes that the capital contribution that was not utilized to
acquire properties must be invested in government bonds that are registered with the National Securities Register, or in shares of
investment entities in debt instruments. During the years of 2014 and 2013, the Trust invested in government bonds.
Hotels acquired subsequent to the IPO–
At the date of contribution, the contributed assets for each hotel are presented below:
Properties
Hampton Inn Galerías Monterrey
$
Hampton Inn Querétaro
Hampton Inn Saltillo
Holiday Inn Express Saltillo
Holiday Inn Express Juárez
Hampton Inn Reynosa
Holiday Inn Express Monterrey
Total $
Land
Buildings
Other assets
Assets
13,893,209
40,175,185
18,046,325
46,023,731
24,617,320
15,170,440
2,247,872
16,464,555
199,734,470
157,915,489
257,772,517
202,317,316
289,630,322
155,158,511
29,182,592
197,742,391
8,663,641
16,692,291
12,922,387
11,746,587
21,763,770
12,047,324
10,184,102
13,708,168
222,291,320
214,782,965
288,741,229
260,087,634
336,011,412
182,376,275
41,614,566
227,915,114
176,638,637
1,489,453,608
107,728,270
1,773,820,515
In addition, in 2013 Fibra INN acquired the following hotels subsequent to its IPO:
Acquisition
Properties
cost
Camino Real Guanajuato $
Marriott Puebla
Holiday Inn Coyoacán Wyndham Garden Irapuato México Plaza Celaya México Plaza León 230,000,000
370,333,843
381,000,000
93,000,000
139,000,000
150,000,000
$ 1,363,333,843
The acquired assets for each hotel during 2013 are presented below:
Acquisition portfolio–
Properties
Holiday Inn Express Playa del Carmen $
Holiday Inn Express Guadalajara UAG
Holiday Inn Guadalajara Centro Histórico
$
Acquisition
cost
135,755,400
76,000,000
186,937,440
139,981,500
204,000,000
193,600,000
936,274,340
At the date of acquisition, the acquired assets for each hotel are presented below:
ANNUAL REPORT 2014
78
Properties
Land
Holiday Inn Express Playa del Carmen
$
39,590,545
13,728,761
Holiday Inn Express Guadalajara UAG
86,312,493
Holiday Inn Guadalajara Centro Histórico
25,610,036
54,970,771
38,062,865
Total $
258,275,471
Buildings
Other assets
Assets
87,076,412
59,369,864
92,552,784
110,016,317
134,243,923
140,807,879
9,088,443
2,901,375
8,072,163
4,355,147
14,785,306
14,729,256
135,755,400
76,000,000
186,937,440
139,981,500
204,000,000
193,600,000
624,067,179
53,931,690
936,274,340
Land
Buildings
Other assets
Assets
46,000,000
107,699,340
95,250,000
23,250,000
34,750,000
37,500,000
172,790,239
255,536,689
264,263,305
64,931,055
98,711,455
105,432,684
11,209,761
7,097,814
21,486,695
4,818,945
5,538,545
7,067,316
230,000,000
370,333,843
381,000,000
93,000,000
139,000,000
150,000,000
Total 344,449,340
961,665,427
57,219,076
1,363,333,843
$
The acquisitions of hotels that occurred in 2014 were performed to continue with the expansion of hotel operating activities in
Mexico, in accordance with its established growth and expansion plans.
During 2014, Fibra INN concluded the acquisition of 11 hotels as mentioned below:
Consideration
Properties
Date of acquisition
paid in cash
March 31, 2014
$ 257,500,000
Aloft Guadalajara (1)
Holiday Inn Altamira
April 28, 2014
113,020,000
México Plaza Aeropuerto, Silao
April 29, 2014
82,000,000
Casa Grande, Chihuahua
December 5, 2014
105,500,000
Casa Grande, Delicias
December 5, 2014
71,266,325
Microtel Inn Suites by Wyndham, Ciudad Juárez
November 21, 2014
61,000,000
Microtel Inn Suites by Wyndham, Chihuahua
December 16, 2014
73,000,000
Microtel Inn Suites by Wyndham, Culiacán
November 21, 2014
60,937,000
Microtel Inn Suites by Wyndham, Toluca
December 16, 2014
66,000,000
Crowne Plaza, Monterrey
December 10, 2014
351,000,000
México Plaza Andares, Guadalajara
December 1, 2014
183,000,000
$
1,424,223,325
79
ANNUAL REPORT 2014
Properties included in the acquisition portfolio are as follows:
Properties
$
Marriott Puebla
Holiday Inn Coyoacán Wyndham Garden Irapuato México Plaza Celaya México Plaza León 8. PROPERTY, FURNITURE AND EQUIPMENT–
Properties
Aloft Guadalajara (1)
$
Holiday Inn, Altamira
México Plaza Aeropuerto, Silao
Casa Grande, Chihuahua
Casa Grande, Delicias
Microtel Inn Suites by Wyndham,
Ciudad Juárez
Chihuahua
Culiacán
Toluca
Crowne Plaza Aeropuerto, Monterrey
México Plaza Andares, Guadalajara
Total $
Land
Buildings
Other assets
Assets
16,099,719
28,255,000
22,000,000
26,375,000
17,816,581
204,037,169
75,193,009
47,925,609
70,824,721
46,398,258
37,363,112
9,571,991
12,074,391
8,300,279
7,051,486
257,500,000
113,020,000
82,000,000
105,500,000
71,266,325
15,250,000
35,415,932
10,334,068
61,000,000
18,250,000
48,823,258
5,926,742
73,000,000
19,687,000
34,526,124
6,723,876
60,937,000
16,500,000
87,750,000
45,750,000
37,753,981
221,026,952
121,705,799
11,746,019
42,223,048
15,544,201
66,000,000
351,000,000
183,000,000
313,733,300
943,630,812
166,859,213
1,424,223,325
(1)Fibra
INN made a prepayment of $37,500,000 related to expect future performance, which will be calculated in the third year
of hotel operations according to formulas determined in the acquisition agreement. The Trust has allocated this payment as
part of the acquisition investment, since it considers a high probability that the hotel performance is above expectations and
such the payment is not expected to be returned.
The value of assets acquired in the different hotel acquisitions is similar to the acquisition price paid and therefore no goodwill has
been generated in these transactions.
From the respective acquisition dates, revenue and net income of the acquired hotels included in Fibra INN’s consolidated income
statement were $54,486,763 and $10,791,629, respectively, for the year ended December 31, 2014.
If the abovementioned hotels had been acquired on January 1, 2014 Fibra INN’s management estimates that revenue and operating
income for the period from January 1 to December 31, 2014 would have been $271,000,000 and $125,000,000, respectively.
Acquisition costs of acquired hotels as of December 31, 2014 amounted $64,338,383 and were recognized in the consolidated
income statement.
ANNUAL REPORT 2014
80
2014
2013
Land
$ 1,093,096,746
779,363,447
Buildings 4,240,395,2733,078,533,989
271,870,304
173,272,063
183,622,497
100,195,146
220,285,426
118,768,630
6,009,270,246 4,250,133,275
Less accumulated depreciation
(158,819,974)
(50,563,380)
5,850,450,272 4,199,569,895
Constructions in progress
190,653,430
96,598,223
$ 6,041,103,702 4,296,168,118
Construction in progress are mainly related to three hotels under development which are expected to be concluded during 2015.
Cost of properties include $11,146,717 of capitalized borrowing costs during 2014.
The movement of property, furniture and equipment during the periods of 2014 and 2013 is as follows:
Balances as of Balances as of
Historic cost
January 1, 2014
Additions December, 31 2014
Land
$
779,363,447 313,733,299 1,093,096,746
Buildings3,078,533,989 1,161,861,2844,240,395,273
173,272,063 98,598,241
271,870,304
100,195,146
83,427,351
183,622,497
118,768,630 101,516,796
220,285,426
96,598,223
94,055,207
190,653,430
$ 4,346,731,498 1,853,192,178 6,199,923,676
Balances as of Balances as of
Historic cost
January 1, 2014
Additions December, 31 2013
Land
$
434,914,107 344,449,340 779,363,447
Buildings 2,088,616,302 989,917,6873,078,533,989
137,568,899
35,703,164
173,272,063
68,559,245
31,635,901
100,195,146
93,060,715
25,707,915
118,768,630
–
96,598,223
96,598,223
$ 2,822,719,268 1,524,012,230 4,346,731,498
81
ANNUAL REPORT 2014
At the date of acquisition, the fair value of the acquired assets are presented below:
The initial portfolio includes the investment by the acquisition of properties, as mentioned in note 7, for $2,710,094,855, plus costs
of deeds for $112,624,413.
11. TRANSACTIONS AND BALANCES WITH RELATED PARTIES
a. Transactions with related parties were as follows:
Accumulated depreciation–
Accumulated Accumulated
depreciation as
Depreciation depreciation as
of December 31, expense of
of December 31,
2013
2014 2014
Buildings
$ 22,821,164 51,058,539 73,879,703
17,288,720
34,648,700
51,937,420
4,969,495
11,415,490
16,384,985
5,484,001
11,133,865
16,617,866
$
50,563,380
108,256,594 158,819,974
2014
2013
Acquisition, advisory, asset management and
development services (1)
$
83,350,302
83,764,070
(2)
Hotel management and professional services 226,522,493
3,962,380
Income from lease of property and other operating income (3)
$
– 193,565,436
Lodging income
2,117,383
–
(4)
Income from leasing 44,928,110
597,282
(1)
Asesor de Activos Prisma, S.A.P.I. de C.V. as mentioned in note 1(i).
de Activos Prisma, S.A.P.I. de C.V., Servicios Integrales Fibra Inn, S.A.P.I. de C.V. and Impulsora Fibra Inn, S.A.P.I. de C.V.
(the last two entities only rendered services in 2014), as mentioned in note 1 (ii and iii).
(3) Prisma Torreón, S.A.P.I. de C.V., Hotelera Saltillo, S.A.P.I. de C.V. until December 25, 2013.
(4) Operadora México Servicios y Restaurantes, S.A.P.I. de C.V. as mentioned in note 1(i).
(2)Gestor
9. PROPERTY ACQUISITION LIABILITY –
As of December 31, 2014 the Company has liabilities net of prepayments, which are related to the acquisition of two hotels as
mentioned below:
México Plaza Andares $
Microtel Toluca 114,960,000
29,694,899
144,654,899
$
The property acquisition liability that existed as of December 31, 2013 corresponding to hotels such as Holiday Inn Puebla La Noria,
Wyndham Garden Irapuato, México Plaza Celaya and México Plaza León, were settled in January, February, April and October 2014.
10. INTANGIBLE ASSETS–
As of December 31 2014 and 2013, intangible assets with definite useful live are as follows:
ANNUAL REPORT 2014
82
Licenses and expenses related to use of trademarks $
Software costs prepayments Less accumulated amortization
$
2014
2013
8,550,233
10,404,732
–
–
18,954,965
–
–
–
18,954,965
–
Trademark use rights represent rights acquired for the use of national and international franchises, currently under operation of
hotels established in Mexico.
b. Accounts receivable from related parties are:
Operadora México Servicios y Restaurantes, S.A.P.I. de C.V. (1)
$
(2)
Prisma Torreón, S.A.P.I. de C.V. Hotelera Saltillo, S.A.P.I. de C.V. (2)
Trust 1765 (2)
Servicios Integrales Fibra Inn, S.A.P.I. de C.V
Gestor de Activos Prisma, S.A.P.I. de C.V.
Asesor de Activos Prisma , S.A.P.I. de C.V.
Impulsora Fibra Inn, S.A.P.I de C.V.
Account receivable from trustor Asesor
de Activos Prisma, S.A. de C.V. (3)
$
2014
2013
27,905,738
11,720,108
5,682,982
3,968,705
2,990,716
1,790,593
22,341
18,437
708,700
25,512,842
16,454,394
–
–
–
29,519
–
54,099,620
42,705,455
20,000
54,119,620
20,000
42,725,455
(1)
Derived primarily from leasing of spaces.
Derived from collections in account of Trust F/1616.
(3) There is an account receivable from shareholders for the amount of $20,000 related to the initial contributed capital.
(2)
83
ANNUAL REPORT 2014
As of December 31, 2014 there are 16 properties that guarantee the bank loans mentioned in note 16.
12.TRUSTORS´ EQUITY–
Asesor de Activos Prisma, S.A.P.I. de C.V. (1)
$
Trust F/1765 (2)
Gestor de Activos Prisma, S.A.P.I. de C.V. (3)
Prisma Torreón, S.A.P.I. de C.V. (4)
Servicios Integrales Fibra Inn, S.A.P.I. de C.V. (5)
Operadora México Servicios y Restaurantes, S.A.P.I. de C.V. Hotelera Saltillo, S.A.P.I. de C.V. (4)
Impulsora Fibra Inn, S.A.P.I de C.V. (5)
HPM Edificaciones S.A.P.I. de C.V.
Prisma Norte, S.A. de C.V.
Less: Current portion of the liability Long-term payable
$
2014
2013
29,068,699
11,962,509
9,369,886
8,052,149
6,116,254
3,502,775
887,190
420,266
7,883
–
800,000
166,990
5,003,879
3,747,779
–
13,053
1,410,077
–
–
902,603
69,387,611
(67,343,389)
12,044,381
(10,000,159)
2,044,222
2,044,222
(1)
Advisory services for assets management and acquisition and development of new investments.
(2) Operating services granted in hotels, mainly food and beverages.
(3) Hotel management services and until March 2014, personnel administrative services.
(4)Primarily derived from payments made on behalf of the Trust, as well as for services of the period that partially corresponds
to the Trust.
(5)Payroll services. Additionally, there is a long-term liability for $2,044,222 that corresponds to labor obligations of 2014 and
2013, respectively.
d. The benefits granted to key management personnel during the period are shown below:
Short term benefits
$
Share-based compensation $
ANNUAL REPORT 2014
84
2014
2013
24,610,635
18,499,999
16,794,003
14,869,623
43,110,634
31,663,626
Fibra INN has constituted a long term compensation plan for certain eligible executives, which consists in granting 3,000,000
equity instruments (CBFIs), conditioned to their employment in the Trust for a period of 3 years. This compensation plan qualifies as
a consideration under the scope of IFRS 2, “Share-based Payments”. The service provided and the corresponding increase in equity
of the Trust is measured at fair value, which is the market value of the equity instruments at the grant date. The Trust recognized a
total amount of $18,499,999 and $14,869,623 in 2014 and 2013, respectively, for services received during the period based on the
best estimate of the number of instruments that are expected to vest impacting equity.
e. Transactions with management personnel and close family members
The Trust does not celebrate business transactions with management personnel and their close family members other than
transactions at market value and available to the general public and whose amounts are not significant.
Contributions–
a. The Trust´s equity consists of an initial contribution of $20,000 and of the proceeds of the issue of CBFIs.
b.On March 13, 2013, the Trust carried out an IPO of CBFIs in Mexico and other international markets (the “Offering”). The overall
amount of the Global Offer (both the primary and secondary Offerings) amounted to $4,834,683,033, where 261,334,218
CBFIs were offered, with an over-allotment of $18.50, in the Mexican Stock Exchange (Bolsa Mexicana de Valores (BMV)), and
in foreign markets.
In relation to the Offering, Adhering Holders contributed to Fibra INN the hotels that comprise the Acquisition Portfolio in
exchange for CBFIs, valued at $1,773,820,515, representing 95,882,190 CBFIs.
c.On November 21, 2014, Fibra INN concluded the process of subscription exclusive for holders of CBFI´s , subscribing a total of
178,685,324 new CBFIs, at a subscription price of $15.85 for a total of $2,832,162,385.
As of December 31, 2014 and 2013, the number of outstanding CBFIs was 437,019,542 and 258,334,218, respectively. At these
same dates, there are 3,000,000 CBFIs in treasury that represent $55,500,000.
Reimbursements and distributions to holders of certificates–
a.On April 22, 2013, the Technical Committee of Fibra INN approved through the authorization of the majority of its independent
members distributions for a total of $5,920,878, with a value of $ 0.0229 per CBFI. On the same date, a capital reimbursement
for a total of $1,272,100, with a value of $0.0049 per CBFI was approved. This distribution was paid in cash by Fibra INN on
May 15, 2013.
b.On July 24, 2013, the Technical Committee of Fibra INN approved through the authorization of the majority of its independent
members distributions for a total amount $4,296,578, with a value of $0.0166 per CBFI. On the same date, a capital
reimbursement for a total of $48,993,603, with a value of $0.1897 per CBFI was approved. This distribution was paid in cash
by Fibra INN on August 20, 2013.
c.On October 23, 2013, the Technical Committee of Fibra INN approved through the authorization of the majority of its
independent members distributions for a total amount of $26,834,501, with a value of $ 0.1039 per CBFI. On the same date,
a capital reimbursement for a total of $33,570,843, with a value of $0.1300 per CBFI was approved. This distribution was paid
in cash by Fibra INN on November 19, 2013.
d.On February 25, 2014, the Technical Committee of Fibra INN approved through the authorization of the majority of its
independent members distributions for a total amount of $6,917,050, with a value of $0.0268 per CBFI. On the same date, a
capital reimbursement for a total of $54,763,649, with a value of $0.2120 per CBFI was approved. This distribution was paid
in cash by Fibra INN on March 12, 2014.
e.On April 23, 2014, the Technical Committee of Fibra INN approved through the authorization of the majority of its independent
members distributions for a total amount of $5,699,426, with a value of $0.0220 per CBFI. On the same date, a capital
reimbursement for a total of $53,274,203, with a value of $0.2062 per CBFI was approved. This distribution was paid in cash
by Fibra INN on May 12, 2014.
85
ANNUAL REPORT 2014
c. Payables with related parties are:
f.On July 24, 2014, the Technical Committee of Fibra INN approved through the authorization of the majority of its independent
members distributions for a total amount of $43,481,154 with a value of $0.1683 per CBFI. This distribution was paid in cash
by Fibra INN on August 11, 2014.
g.On October 20, 2014, the Technical Committee of Fibra INN approved through the authorization of the majority of its
independent members distributions for a total amount of $59,998,606 with a value of $0.2323 per CBFI. This distribution was
paid in cash by Fibra INN on November 10, 2014.
Issuance of CBFIs–
13. INCOME TAX–
Trust F/1616 qualifies as a transparent entity in Mexico in accordance to Income Tax Law. Therefore, all proceeds resulting from the
Trust’s operations are attributable to the holders of CBFIs and the Trust is not subject to income tax in Mexico.
In order to maintain its FIBRA status, the Tax Administration Service established, in Articles 223 and 224 of the Income Tax Law, that
Fibra INN must annually distribute at least 95% of its net tax result to CBFIs holders of Fibra INN. The holders of CBFIs confirmed
their agreement that the Trustee complies with its obligations as required by the IETU Law and thus determines taxable income in
accordance with Clause V of Rule I.4.4.3 of the 2013 Miscellaneous Tax Resolution. In accordance with the new 2014 Income Tax
Law, articles related to tax requirements for FIBRAs are now 187 and 188, which support the same characteristics than the prior law.
As of December 31, 2014 and 2013 the issuance of CBFIs as a part of the equity is integrated by:
The Trust’s subsidiary is subject to income tax and flat tax (until 2013).
Concept
Price
Contributed capital
2013
Initial contribution:
Cash contribution:
162,452,028 issued CBFIs
18.50
$
3,005,362,518
Contribution in kind:
95,882,190 issued CBFIs 18.50
1,773,820,515
Issuance costs
Total issuance of CBFIs in 2013 $
Income tax – The rate was 30% for 2013, and under the new 2014 Income Tax Law (“2014 Act”) it will continue at 30% for
subsequent years.
Flat tax – This tax is levied on the sales of goods, the provision of independent services and the granting of temporary use or
enjoyment of property, less certain authorized deductions, under terms defined in the Law. Both, income and deductions, and certain
tax credits, are determined based on cash flows for each year at the rate of 17.5%. Beginning 2014 the flat tax was eliminated.
The tax payable is the greater of the income tax and the flat tax (until 2013).
4,779,183,033
(237,399,113)
The deferred income taxes are calculated on the basis of income tax at the rate applicable to the period in which the reversal of
the temporary difference corresponding expected.
4,541,783,920
a. Income taxes recognized in profit or loss
15.85
2,832,162,385
Deferred income tax
$
Issuance costs
(81,351,815)
2014
Cash contribution:
178,685,324 issued CBFIs
2014
247,025
2013
74,861
b. As of December 2014 y 2013, the concepts that comprise the deferred income tax are as shown:
$
2,750,810,570
Reserves –
Executive share-based compensation reserve–
The effect resulting from the executive share-based compensation reserve is determined in accordance to IFRS 2, “Share-based
Payments”, which is measured at fair value of the market of the instrument at the grant date, as mentioned in note 11 d.
ANNUAL REPORT 2014
86
Reserve of valuation effect of derivate financial instruments
The hedging reserve comprises the effective portion of the net accumulated change in fair value of interest rate hedge instruments
related to hedging transactions that have not been settled.
Property, furniture and equipment
$
Provisions
Employee benefits
$
2014
2013
1,056
251,402
69,428
942
–
73,919
321,886
74,861
87
ANNUAL REPORT 2014
Total issuance of CBFIs in 2014
14. EMPLOYEE BENEFITS–
The carrying amount of financial instruments held by the Trust, such as cash and cash equivalents, accounts receivable and accounts
payable, approximate their fair values due to their short maturities. Additionally, since the disposal of the line of credit entered into
by the Trust was performed in recent market terms, as it is mentioned in note 16, it is considered that its carrying amount does not
differ significantly from its fair value.
The movement in the defined benefit obligation during the year is shown below:
a.
Defined benefit plans
Retirement benefits
2014
2013
Defined benefit obligation $
246,397
127,721
Current service cost
63,039
150,209
Paid benefits
(51,767)
–
Initial liability assumed
(29,589)
–
Actuarial gains 3,348
(31,533)
$
231,428
246,397
b. Cost recognized in profit or loss
Retirement benefits
2014
2013
Net cost of the period:
Current service cost
$
45,123
24,399
Interest cost
17,916
125,810
Net cost of the period
$
63,039
150,209
2014
Financial assets:
Cash and cash equivalents $ 1,106,691,219
Trade and other accounts receivable
82,880,028
Accounts receivable from related parties
54,119,620
ANNUAL REPORT 2014
On December 2014, Fibra INN entered into a derivative financial instrument contract to hedge the total outstanding balance of
the line of credit contracted in September 2014 through an interest rate swap converting its variable rate into a fixed rate with the
same maturity of the outstanding balance. This derivative financial instrument is described as follows:
Fair value
Liability
Counterparties
Notional
Current basic conditions
2014 2013
Various (1)
(1)
$ 100,000,000
Fibra INN pays a fixed rate in Mexican Pesos
of 5.37% and receives TIIE + 2.50
$
(893,193)
–
Banorte, Actinver, Banamex, BanRegio and Scotiabank
The following table analyzes financial instruments measured at fair value through the fair value hierarchy described below.
Types of financial instruments–
88
Derivative financial instrument
Fair value hierarchy
15. FINANCIAL INSTRUMENTS AND RISKS MANAGEMENTS–
Financial liabilities:
Measured at amortized cost:
Suppliers $
Other payables
Properties’ acquisition liability
Accounts payable to related parties
Client prepayments
Bank charges due to bank
Bank loans
Measured at fair value:
The bank loans balance for $66,029,307, net of transaction costs of $33,970,693, corresponds to the partial disposal of the line of
credit made in December 2014.
2013
385,639,741
6,813,723
42,725,455
The different levels have been defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2: inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability are not based in observable market data (unobservable inputs).
53,301,237
4,025,327
144,654,899
69,387,611
4,783,497
15,300,694
66,029,307
11,339,095
4,856,177
275,500,000
12,044,381
168,057
–
–
893,193
–
As of December 31, 2014
$
$
Level 1
Level 2
–
Level 3
893,193
–
–
Total
–
893,193
–
–
89
ANNUAL REPORT 2014
Net projected liability
Fibra INN considers that the carrying amounts of its financial instruments approximate their fair values given their short maturity
period.
Capital management
a. The financial position in foreign currency as of December 31, 2014 and 2013 is:
Fibra INN manages its capital with the objective of maximizing the wealth of its shareholders and the distributions by optimizing
the ratio of debt and equity. The bank debt as December 31, 2014 was $66,029,307, net of issuance costs of $33,970,693, and
represented 1.3% of total assets. In order to maintain an appropriate ratio between assets and liabilities, the Mexican General
Regulations Applicable to Securities Issuers establishes a limit for the assumption of credits in charge of the Trust and considers a
debt service index.
2014
U.S. Dollars:
Financial assets 529,449
Financial liabilities 92,711
Fibra INN’s capital consists mainly of equity. The objectives of capital management are to manage the capital to make sure that the
operating funds are available to maintain consistency and sustainability in the distributions to its shareholders and fund required
capital expenses, as well as provide necessary resources for the acquisition and development of new properties.
(Long) short financial position
The objective of the Trust’s financial risk management, is to comply with its financial expectations, operating results and cash flows
that improve the financial position of Fibra INN, also to ensure the ability of making distributions to CBFIs holders’ and to satisfy
any future debt obligations.
The role of the Technical Committee of Fibra INN is to advise and instruct the trustee with the sale or repurchase of CBFIs, analyze
and approve potential investments, acquisitions and disposals, provide corporate services, coordinate access to domestic financial
markets, monitor and manage the financial risks associated with Fibra INN’s operations through internal risk reports which analyze
exposures by degree and risk magnitude. These risks include market risk (including risk of changes in market prices, currency risk
and interest rate risk), credit risk and liquidity risk.
Market risk management
Fibra INN’s activities may be exposed to finance risks related to changes in market interest rates, foreign exchange rates and mainly
in market prices, affecting the revenues of the Trust or the value of its financial instruments.
Interest rate risk
Fibra INN can obtain financing under different conditions, either from third parties or related parties and variable interest rates
would expose it to changes in market rates. As of December 31, 2014, the Trust is not significantly exposed to interest rate
variations because it entered into a derivative financial instrument to hedge the total outstanding balance of the financial debt
described in note 16, through an interest rate swap with the same maturity of the outstanding balance.
Foreign currency risk
Fibra INN enters into transactions denominated in U.S. dollars, therefore, it is exposed to currency fluctuations between the
exchange rate of the Mexican peso and the U.S. dollar.
ANNUAL REPORT 2014
90
153,382
186,070
32,688
b. The exchange rates, in Mexican Pesos, as of the date of the consolidated financial statemens are as follows:
U.S. Dollar
2014
14.7348
2013
13.0652
Sensitivity analysis to foreign exchange risk
If the exchange rate were to increase or decrease $1 Mexican peso per U.S. dollar with all other variables held constant, the results
of the year and equity of Fibra INN for the year ended December 31, 2014, would have a positive or negative effect, respectively,
of approximately $436,739.
Exchange rate
Balances (MXN)
+ $1 USD
No change
– $1 USD
$
$
$
Effect in equity and
profit or loss (MXN)
6,871,996
$
6,435,257
5,998,518
$
436,739
–
(436,739)
Credit risk management
Credit risk refers to the risk that a counterparty breaches its contractual obligations resulting in financial loss to Fibra INN. Virtually,
all of Fibra INN’s income is derived from hotel services. As a result, its performance depends on its ability to collect the amounts
from hotel services rendered to guests and the guests’ ability to make the payments. Revenue and funds available for distribution
would be adversely affected if a significant number of guests do not make the rental payments when they are due; which could
result in the closing of operations or bankruptcy.
The administration of Fibra INN has determined that the maximum exposure to credit risk is shown in the statement of financial
position for its accounts receivables, related parties and other accounts receivables. As mentioned in note 6, the Trust does not have
receivables overdue that are significant as of the date of these financial statements, thus it has not recognized an allowance for
doubtful accounts. In addition, Fibra INN limits the exposure to credit risk investing solely in liquid instruments and with high-credit
quality counterparties. Hence, management does not expect that any of its counterparties will not meet their obligations.
91
ANNUAL REPORT 2014
Financial risk management
(436,739)
2013
Liquidity risk management
16.BANK LOANS
Liquidity risk represents the possibility that Fibra INN has difficulties to comply with its obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. Fibra INN has established an appropriate framework for
managing liquidity risk in the short, medium and long term. Fibra INN manages its liquidity risk by maintaining adequate reserves,
monitoring expected cash flow requirements and actual income, and by managing the maturity profiles of its financial assets and
liabilities. The Treasury department monitors the maturity of its liabilities to comply with the respective payments
On September 9, 2014 the Trust signed an agreement to enter into a bank line of credit for $2,300,000,000 to fund its acquisition
and development growth plan.
The following table shows Fibra INN’s outstanding maturities for non-derivative financial liabilities as of December 31, 2014:
Suppliers $
Other payables Properties’ acquisition liability Accounts payable to related parties
Bank charges due to bank
Client prepayments Bank loans
$
1 year
More than 1 year
As of December 31, 2014, the outstanding balance of bank loans is as follows:
53,301,237
4,025,327
144,654,899
67,343,389
10,700,694
4,783,497
–
2,044,222
4,600,000
–
66,029,307
284,809,043
72,673,529
Utilized line of credit $
Less transaction costs
The following table shows the contractual maturity of the remaining financial liabilities (debt) with established payment periods.
The table has been prepared from the financial liabilities undiscounted cash flows based on the earliest date in which Fibra INN
is required to pay. To the extent that the interest cash flows are variable, the undiscounted amount is derived from the interest
rates available at the end of the reporting period. The contractual maturity is based on the earliest date in which Fibra INN may be
required to make the corresponding payments.
Less than
1 year
1–2 years
2–3 years
3–4 years
4–5 years
Instruments with
variable interest rate
$
More than
5+ years
ANNUAL REPORT 2014
$
66,029,307
Transaction costs related to obtaining the bank loans are deferred and amortized during the instrument’s contractual term.
The Trust is contractually required to hedge at least 70% of the outstanding balance with a derivative financial instrument to
exchange the TIIE variable interest rate for a fixed rate.
As of December 31, 2014, Fibra INN hedged 100% of the outstanding balance with each of the financial institutions participating
in the line of credit, through an interest rate swap with the same maturity as the disposed balance.
As of December 31, 2014, there are bank charges payable for $15,300,694 of which $4,600,000 are long-term.
At the beginning of the fiscal year 2014, Fibra INN obtained short-term loans for $900,000,000 with Actinver and Banorte. Such
loans were settled during November 2014.
17. COMMITMENTS–
5,802,000
5,802,000
$5,802,000 5,802,000
5,885,333
6,343,667
101,092,000
5,885,333 6,343,667 101,092,000
–
–
The amounts of the financial instruments included with variable interest rates are subject to changes if such rate varies with
reference to the estimates made at the date of the financial statements.
92
100,000,000
33,970,693
a.Minimum lease payments
The minimum lease payments for operating leases where Fibra Inn is the lessee, are as follows:
Year
Less than 1 year
$
1 – 5 years
More than 5 years
$
Total
27,781,200
111,124,800
416,718,000
93
555,624,000
ANNUAL REPORT 2014
The institutions participating in the line of credit are: Banorte, Actinver, Banamex, BanRegio and Scotiabank. This bank debt is
located in a cash line of credit account that has a fiduciary and pledge collateral, with a term of 54 months and payable at maturity.
The agreed interest rate is TIIE plus 2.5% for the first three years, plus two increases: an additional 0.25% during months 37 to 45
and a 0.5% additional increase during months 46 to 54. Interest is paid every quarter of the year. The credit agreement establishes
certain obligations to do and not to do as well as to meet certain financial ratios, which as of the date of the financial statements
have been met by the Trust.
The minimum lease payments presented above do not consider any adjustment of time value of money to the rental income, to
which Fibra INN has contractual rights. As well, it does not consider any variable rents, nor renovation periods, only compulsory
terms for lessors. As well, the minimum rental income, by contract, is monitored at least once a year.
The following information represents the measurements that are informed to level of management in charge of making operating
decisions for purposes of allocating and distributing resources as well as assessing segment performance. For the years ended
December 31, 2014 and 2013, income from operations of the Trust from external customers by geographic location are as follows:
b.Franchises
2014
Fibra INN has entered into franchise contracts to operate with various trademarks such as Intercontinental Hotel Group, Hilton
Worldwide, Wyndham Hotel Group International, Marriott International, and W International Inc., which are valid during
periods between 10 and 20 years. Derived from these contracts is an obligation to pay royalties between 2% and 5% of the
revenue generated from lodging, marketing expenses, loyalty program charges, among others. Total payments arising from
these concepts amounted $ 95,934,727 as of December 31, 2014.
Lodging income
$
294,303,171
Rental income
11,058,867
–
Gross margin
119,244,237
1,793,333,136
Depreciation 33,049,930
Northeast
South Central
West
411,566,382
38,799,875
–
166,986,889
2,844,231,725
57,911,481
78,590,078
1,403,702
–
26,827,764
854,114,817
12,377,259
South Central
West
5,805,374
67,135,872
10,560,227
72,786,030
2,457,858,447
21,165,780
773,943
10,517,280
3,229,850
12,944,365
370,369,582
4,355,830
North
Consolidated
47,691,394 832,151,025
859,409
52,121,853
–
–
17,223,065 330,281,955
549,424,024 6,041,103,702
4,917,924 108,256,594
c.Litigation
d. Tax contingencies
Under current tax law, the authorities are entitled to examine the five fiscal years prior to the last tax return presented.
Lodging income
$
1,980,292
Rental income
78,984,409
12,354,536
Gross margin
82,812,170
1,284,720,332
Depreciation
22,803,588
North
Consolidated
189,213
8,748,822
10,304,627 166,942,188
1,075,917
27,220,530
9,902,381
178,444,946
182,919,757 4,296,168,118
2,238,181
50,563,380
19.SUBSEQUENT EVENTS–
In case the tax authorities review the prices and reject the agreed amounts, they may require, in addition to the collection of
the corresponding tax and complementary charges (interest and inflation), penalties on unpaid taxes, which could be up to a
100% of the inflation adjusted amounts.
On February 26, 2015, Fibra INN announced the cash distribution from the capital reimbursement for the period from October 1 to
December 31 2014 which was paid on March 6, 2015. The total payment in national currency amounted $74,615,156 with a value
of 0.1707 per outstanding CBFI.
According to IFRS 8, Operating Segments, Fibra INN discloses financial information by region that is informed and that is regularly
monitored by the Technical Committee and the executives in charge of making decisions. Fibra INN operates in four geographical
areas that constitute its reportable segments:
•
•
•
•
ANNUAL REPORT 2014
Northeast
In accordance with the Income Tax Law, companies that conduct transactions with related parties are subject to certain
limitations and tax requirements, regarding the determination of the agreed prices, because they must be equivalent to those
that would be used in arm’s-length transactions.
18.BUSINESS SEGMENT INFORMATION–
94
2013
Northeast (Nuevo León, Coahuila and Tamaulipas)
South Central (Querétaro, Estado de México, Puebla, Guanajuato, Quintana Roo and Distrito Federal)
West (Jalisco); and
North (Chihuahua and Sinaloa).
There were no intersegment transactions recorded. The accounting principles of the reportable segments are the same accounting
policies of the Trust described in note 3. The gross margin by segment represents the net income on the same basis presented in
the consolidated income statement.
20.NEW ACCOUNTING PRONOUNCEMENTS–
Fibra INN adopted the following new and revised IFRS effective for periods that began on or after January 1, 2014, as well as a
series of effective IFRS for future periods:
–
–
–
–
–
–
–
–
–
–
–
Amendments to IFRS 10, Consolidated Financial Statements,
Amendments to IAS 32, Offsetting Financial Assets and Financial Liabilities
Amendments to IAS 36, Impairment of Assets
Amendments to IAS 39, Financial Instruments: Recognition and Measurement
IFRIC 21, Levies
Amendments to IAS 19, Employee Benefits
Annual Improvements 2010-2012
Amendments to IAS 16, Property, Plant and Equipment and y IAS 38 Intangible Assets
Amendments to IAS 1, Disclosure Initiative
95
ANNUAL REPORT 2014
Fibra INN is involved in various lawsuits and claims arising from the normal course of business and other contractual obligations,
which are not expected to have a significant effect on its financial position and future results of operations.
INFORMATION FOR INVESTORS
Fibra INN did not have significant impacts in its consolidated financial statements derived from the adoption of these IFRS and
amendments.
INVESTOR RELATIONS
New IFRS not yet adopted
In Monterrey, México:
On the other hand, Fibra INN has not applied the following new and revised IFRSs that have been issued but are not yet effective
as of December 31, 2014.
Lizette Chang
Investor Relations
E-mail: [email protected]
Phone: 52(81)5000 0211
IFRS 9, Financial Instruments
IFRS 9, “Financial Instruments” issued in July 2014, is the replacement of IAS 39 “Financial Instruments: Recognition and
Measurement”. This standard includes requirements for recognition and measurement, impairment, de-recognition and general
hedge accounting. This version supersedes all previous versions and is mandatorily effective for periods beginning on or after
January 1, 2018, with early adoption being permitted. IFRS 9 (2014) does not replace the requirements for portfolio fair value hedge
accounting for interest rate risk since this face of the project was separated from the IFRS 9 project.
IFRS 9 (2014) is a complete standard that includes the requirements previously issued and the additional amendments to introduce
a new expected loss impairment model and limited changes to the classification and measurement requirements for financial
assets. More specifically, the new impairment model is based on expected credit losses rather than incurred losses, and will apply
to debt instruments measured at amortized cost or FVTOCI, lease receivables, contract assets and certain written loan commitments
and financial guarantee contracts. Regarding the new measurement category of FVTOCI, it will apply for debt instruments held
within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets.
KPMG Cárdenas Dosal, S.C.
Manuel Ávila Camacho 176
Col. Reforma Social, 11650, México, D.F.
Phone: 52(55) 5246 8300
www.kpmg.com.mx
Trustee
Design and production: Milenio3 / Genera
ANNUAL REPORT 2014
Ticker Symbol
FINN13
Type of Security
Real Estate Trust Stock Certificates
Domestic Market
Mexican Stock Exchange
Foreign Market
Rule 144A and Reg S
Independent Auditors
IFRS 15, “Revenue from Contracts with Customers”, was issued in May 2014 and applies to annual reporting periods beginning on
or after 1 January 2017, earlier application is permitted. Revenue is recognized as control is passed, either over time or at a point
in time.
96
Issuer:
Deutsche Bank México, S.A., Multi-Bank Institution
Fiduciary Division, Trust No. F/1616
Fibra Inn
Ricardo Margain Zozaya 605, Floor 1,
Santa Engracia,
San Pedro Garza García, Nuevo León, 66267, México
Phone: 52 (81) 5000 0200
www.fibrainn.mx
IFRS 15, Revenue from Contracts with Customers
Fibra INN is in the process of assessing the potential impacts from the adoption of this standard in their financial statements.
CBFI Information
Maria Barona / Melanie Carpenter
i-advize Corporate Communications, Inc.
E-mails: [email protected] / [email protected]
Phone: (212) 406-3691/3692
Headquarters
Fibra INN is in the process of assessing the potential impacts from the adoption of this standard in their financial statements.
The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with
customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In applying the
revenue model to contracts within its scope, an entity will: 1) Identify the contract(s) with a customer ; 2) Identify the performance
obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations
in the contract; 5) Recognize revenue when (or as) the entity satisfies a performance obligation. Also, an entity needs to disclose
sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue
and cash flows arising from contracts with customers.
In New York, U.S.
Deutsche Bank México, S.A.,
Institución de Banca Múltiple, División Fiduciaria
Global Transaction Banking - Trust & Agency Services
Blvd. Manuel Avila Camacho No. 40, Piso 17
Col. Lomas de Chapultepec, C.P. 11000, México D.F.
Phone: 52(55)5201 8000
www.db.com/mexico/
This report has been designed for electronic circulation.
It has been printed in a limited number of copies. Fibra
Inn reiterates its commitment to the environment by
using innocuous materials.
Common Representative
CI Banco S.A.: Mónica Jiménez Labora Sarabia
[email protected]
and/or [email protected]
Cordillera de los Andes No. 265, Piso 8,
Col. Lomas de Chapultepec, 11000, México D.F.
Phone: 52 (55) 5063 3978
www.cibanco.com
The 2014 Fibra Inn Annual Report may include certain
expectations of results for Fibra Inn, its subsidiary and
related parties. The said projections, which depend
on considerations of the administration, are based
on present and known information. However, these
expectations could change due to facts, circumstances
and events that are beyond the control of Fibra Inn.
Ricardo Margain Zozaya 605, FL1
Col. Santa Engracia
San Pedro Garza García, Nuevo León
66267, México
Phone: 52 (81) 5000 0200
www.fibrainn.mx

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